Zimbabwe to allow withdrawals of $1000 a day from some accounts

July 2, 2019
| Report Focus News

Zimbabweans will be allowed to withdraw up to $1000 (about R14000) in cash a day from foreign currency accounts, said Finance Minister Mthuli Ncube yesterday, as the country prepares to relaunch its own currency after a decade of dollarisation.

The surprise announcement will ease fears that the central bank might raid foreign currency accounts, as happened during Robert Mugabe’s rule in 2008. Central bank governor John Mangudya said people and companies in Zimbabwe currently held $1.3billion in foreign currency accounts.

Mangudya told a parliament committee that individuals would be allowed to withdraw up to $1000 a day from their foreign currency accounts without restrictions but that companies would have to talk to their banks if they needed cash dollars.

The southern African nation, whose crops were scorched by a drought this year, is in the grip of foreign currency and fuel shortages and daily electricity cuts lasting up to 15 hours.

President Emmerson Mnangagwa, who replaced long-time leader Mugabe after an army coup in November 2017, is trying to repair an economy ruined by hyperinflation and a long succession of failed economic interventions.

In May, his government agreed a staff-monitored programme with the International Monetary Fund to help Zimbabwe implement coherent economic policies. But a hoped-for turnaround is yet to materialise, and many Zimbabweans are distrustful of Mnangagwa’s promises.

Last week, the government renamed its interim currency, the RTGS dollar, the Zimbabwe dollar and made it the country’s sole legal tender, ending a decade of dollarisation and taking another step towards relaunching a fully-fledged currency.

Mangudya said yesterday that the country would initially print 400million Zimbabwe dollars to be gradually introduced into circulation to plug the gap left by the end of dollarisation.

Ncube had earlier told the same committee that individuals would be allowed to withdraw US dollars in cash from their foreign currency accounts. He defended the surprise manner of the announcement and promised that Zimbabwe would not fall into money-printing of the kind that caused hyperinflation in 2008.

With inflation close to 100% last month and desperate levels of unemployment, Zimbabweans are impatient for progress but are fearful that abandoning dollarisation will cause a new surge in prices. Unions are threatening strikes if Mnangagwa’s government does not overturn the policy.