Amid its chaotic moves yesterday to ban the use of foreign currencies (USDollar and South African Rand primarily) and the reintroduction of a 'ZimDollar', Zimbabwean officials buried the lead a little..
President’s Mnangagwa full statement (released on his official Twitter account) about the reintroduction of the Zimbabwean Dollar:
It has always been clear that for our economy to truly take off, we need our own currency. While the multicurrency regime helped to stabilise the economy, it did not give us control of monetary policy and left us at the mercy of US Dollar pricing which has been a root cause of inflation.
When the majority earn in the local currency, but goods are priced in US dollars, the outcome will only ever be a two tiered economy: Stable and affordable prices for those with access to dollars, while the majority face an unrealistically high cost of living. This is unfair and unsustainable.
Before we could have our own currency, it was however important that key fundamentals were first put in place. Central to this was regaining control of our budget, through decreased spending, increased revenues and, for the first time in recent memory, budget surpluses. Under the careful guidance of Professor Ncube, this has been achieved.
As a result, yesterday we passed a Statutory Instrument to abolish the use of multiple currencies, and make the Zimbabwe dollar the sole legal tender with immediate effect. This is a key component of our transitional stabilisation programme, and an important step in restoring normalcy to our economy.
Government and the RBZ are taking the necessary steps to ensure this move is a success, through increasing the flow of forex into the interbank market while also making forex available to individuals and small businesses through bureau de changes.
On a day to day basis, this will change very little. People will still be paid in RTGS dollar and bond notes, and goods and services will be priced in the same currency. Those holding Nostro accounts will still have access to those accounts in the currency they held.
The only way forward is to reform so that we build a country in which all have the opportunity to prosper. We cannot be fearful of change, but must boldly embrace it as we move forward. The conditions are in place for Zimbabwe to have its own currency. Let us all work together, as one people, to make it a success.
But quietly alongside this, The Reserve Bank of Zimbabwe (RBZ) has issued a directive banning cash withdrawals from all Foreign Currency (FCA) Nostro Accounts following the promulgation of Statutory Instrument 142 of 2019, which reintroduced the local Zimbabwe Dollar and scrapped the multi-currency regime. Nostros/FCA holders will have to liquidate their balances to be usable in Zimbabwe.
As Pindula News notes, what this essentially means is that if one earns USD, deposited into their Nostro account, they can’t draw the cash but will have to get it in Zim Dollar using that day’s interbank rate.
The ZimDollar (black-market RTGS$ rate) has been falling into the news and accelerated beyond...
And Zimbabweans are fuming.
As TechZim's Tinashe Nyahasha writes, I never bought into the whole FCA nostro nonsense. This is one of the times however, that I hate to be proved right. The directive sent to banks by the Reserve Bank of Zimbabwe today the 25th of June 2019 is your confirmation that you should never trust what the Zimbabwean government, the central bank and your bank manager tell you.
Does anyone remember how the minister of finance, Mthuli Ncube and the Reserve Bank of Zimbabwe Governor, John Mangudya promised that money in your FCA Nostro account was safe and would not be touched? They lied.
Here is what the RBZ is now saying about your FCA account:
Funds in all these accounts listed in Table 1 above will retain their foreign currency status and shall continue to be utilised for the settlement of international transactions. In cases where the holder of such an account intends to settle domestic transactions, they shall be required to liquidate their foreign currency account balances to the interbank on a willing seller willing buyer basis.
These are the people that go around the world trying to convince investors that their money is safe in Zimbabwe. What’s disappointing is that these guys did not just decide to raid our wallets like this, they knew right at the time that they were making these promises that the end game was to take your money.
Signals to this effect were all over the show. I even wrote then that you were better off keeping your money under the mattress, the nostro FCA’s were just bad news.
Not the first time
This whole thing happened to us less than three years ago when the Bond Note was introduced. The promise then was that you could always get your US Dollars on demand if you didn’t want to be given Bond Notes at the bank.
Before we knew it, we could never get US Dollars. If we wanted to withdraw that currency we had to deposit into all kinds of prepaid cards. Hey but we had deposited USD in the regular accounts at the beginning?
Beware of the current lie
Right now this is the current lie being told by the powers that be to finish you off and commit you into poverty:
In order to encourage and facilitate the flow of foreign currency, diaspora remittances shall continue to be received in foreign currency. The recipients shall have the option to receive remittances in cash or sell their remittances on a willing seller willing buyer basis to Bureaux de Change and Authorised Dealers or deposit into Individual Nostro FCA.
Very soon, money sent to you by your relatives who have braved the big bad diaspora will be snatched too. They will say the only option open to you is to get a Zim Dollar equivalence of your money. We all know that the interbank rate is not the true equivalence of your money.
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We reiterate our suggestion from yesterday - get long wheelbarrows...