Published by the government of Zimbabwe
Victoria Ruzvidzo
1 January 2008
Harare — THE Reserve Bank of Zimbabwe has extended the lifespan of the $200 000 bearer cheques until further notice in response to challenges in cash swaps caused by countrywide incessant rains and flooding in some instances, while it also emerged yesterday that the "tactical move" to de-monetise the note had achieved the intended results.
The denomination had been scheduled to expire yesterday.
A statutory instrument revoking this was published in an Extraordinary Government Gazette released yesterday.
"All economic players are, therefore, advised and required to continue fully accepting the $200 000 bearer note, as it is a legitimate part of our legal tender," said Dr Gono addressing bankers, journalists, Zimbabwe Revenue Authority and the National Incomes and Pricing Commission officials, among other stakeholders, in Harare yesterday.
The past week had seen many making frantic efforts to dispose of the bearer cheques as the deadline drew nearer. In some instances, some people were reported to have been "selling" their $200 000 bearers for lesser amounts of between $100 000 to $150 000 as they became desperate to rid themselves of the expiring note.
These were attempts to circumvent the banking system where they would have had to declare the source of funds if they exceeded $50 million for individuals and $750 million for companies.
The Herald had also been inundated with calls as people sought to inquire the possibility of an extension of the deadline but the central bank "tactfully" remained mum with Dr Gono only giving ambiguous responses.
About $100 trillion is now in circulation following the injection of $33 trillion in new bearer cheques of $250 000, $500 000 and $750 000 since the launch of Operation Sunrise 2 on December 20.
Much of the $67 trillion previously in circulation had been deposited into the system over the past 12 days, with banks recording improved total deposits of up to $8 trillion a day from $300 billion.
This was expected to ease the cash shortage that has gripped the country over the past two months.
Dr Gono said Members of Parliament, provincial governors, chiefs and other leaders had implored the central bank to extend the December 31 deadline.
Asked why he had not anticipated the challenges brought about by the rains when he launched Sunrise 2 he said: "I do not have supernatural powers. You have all heard that this has been the wettest December in 127 years. Therefore, how would I have known it was going to be like this . . ."
Furthermore, the accomplishment, by RBZ, of its objectives under Operation Sunrise 2 had enabled the central bank to modify its policies. It now had a databank of the nature, form and manner with which cash was being siphoned out of the official system.
The extension of the deadline was also a reflection of the central bank's flexibility in policy implementation, said Dr Gono.
"Lack of flexibility has killed the economy. Policies without a heart or relevance to the people will not work. As RBZ, our monetary policy statements are going to be adaptive to the prevailing circumstances," he said.
He had intimated the move at the weekend.
"I just want the nation to know that currency changeover or Operation Sunrise 2 is a man-made operation. In other words, it has been crafted by man to achieve certain intended results. By the same token, unlike natural disasters for which man can do very little about, Operation Sunrise 2 is not a disaster operation and accordingly we will put in place, at the appropriate time, mitigatory measures to deal with any natural, unforeseen disasters . . ."
The intended effect of the "tactical demonetisation" of the $200 000 bearer note was meant to encourage cash barons, largely blamed for the cash shortage, to re-channel this denomination back into the formal system within 10 banking days as opposed to the 21 under Sunrise 1.
The central bank would intensify its bank supervision, exchange control and anti-money laundering surveillance systems to avoid a relapse into the cash shortage mode.
At the weekend Dr Gono promised the nation the start of 2008 would bring good tidings, particularly on the cash front. He said as much yesterday.
"Through this refined policy position on the currency front, as the central bank, we are very confident that the current cash shortages will end, allowing our productive sectors to run smoothly without payment constraints."
It had emerged that banks' priority banking branches meant for high net worth customers, were the major conduit of illicit cash transactions.
"These high net worth clients go into a branch where they are welcomed by a red carpet and are served in cubicles outside the glare of other depositors."
The RBZ would continue to monitor the profiles of financial transactions with banks expected to report all suspicious transactions.
Investigations had also shown that small bank branches in towns around border posts had recorded unusually high deposits of about $100 billion per day compared to $2,5 billion before Sunrise 2 "and we were wondering that if such areas as Chiredzi, Plumtree, Beitbridge and Chirundu could record that much business activity why was the economy having difficulties".
The central bank now had information on the cartels of individuals trading in the parallel foreign exchange markets and the individuals and corporates who were abusing the Zimbabwe Electronic Transfer Settlement System.
Dr Gono implored all stakeholders in the economy to desist from such malpractices which had proved to be harmful to the economy.
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