US$150m compensation for Zimdollar devaluation

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FINANCE minister Mthuli Ncube says the government plans to set aside US$150 million to compensate
Zimbabweans for loss of value to bank deposits and pensions during the country’s currency reforms last year.
As part of the reforms, the government introduced a “market determined exchange rate” in February last year, which entailed transition from a rate of US$1:RTGS$1, initially to US$1:RTGS$2,5.

“This transition resulted in currency losses to small and vulnerable households with deposits less than US$1 000 in the bank. The movement… resulted in a loss for such depositors,” Ncube told Parliament yesterday during his 2021 National Budget presentation.

“Therefore, the government has made a decision to compensate the small and vulnerable depositors who had US$1 000 and below, for the exchange rate movement loss… with resources equivalent to US$75 million. The
resources will be administered by the Deposit Protection Corporation (DPC).

“Similarly, the above development affected pensioners, with the transition causing losses for pensioners as at February 20, 2019. They too will be compensated with resources equivalent to US$75 million, which will be
co-managed by the government and the Insurance Pension Commission (Ipec). This arrangement excludes recommended compensation under the Smith Report,” Ncube said.

He said the implementation of the commission of inquiry’s recommended compensation framework for loss of value suffered during the pre-2009 period was slowed down by the 2019 currency reforms.

“However, Ipec has registered significant progress on implementation of the compensation schemes in response to 2019 currency reforms through ensuring an equitable allocation of revaluation gains arising from
currency reforms.

“In line with legal reforms recommended by the Justice Smith-led Inquiry, three Bills namely the Ipec Bill, the Pensions and Provident Funds Bill and the Insurance Bill are at different stages of approval.

“Issues addressed in the Bills include regulatory deficiencies identified by the commission of inquiry such as improving governance, proper asset separation between shareholders and policyholders, data integrity, pension
portability and the establishment of the Policyholder and Pension Fund Members Protection Fund, among others… It is expected that the bills will be promulgated into law by end of second quarter 2021,” Ncube said.

The minister presented a $422 billion budget under the theme: ‘‘Building Resilience and Sustainable Economic Recovery’’.

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