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Oliver Kazunga Senior Business Reporter
TREASURY has disbursed $7 million to the banking sector so far to facilitate the ongoing demonetisation process, a Cabinet Minister has said.

Demonitisation is the act of stripping a currency unit of its status as legal tender.

The Reserve Bank of Zimbabwe (RBZ) began the demonitisation exercise last week in an effort to bring finality to the dispute over old Zimbabwean dollar accounts.

The country adopted the multicurrency system in February 2009 to address hyperinflation challenges that resulted in the erosion of value of the local currency.

“So far it (demonitisation programme) is going on extremely well and $7 million has been disbursed to the banking institutions in Zimbabwe for further disbursing to their clients who sit on their books,” Finance and Economic Development Minister Patrick Chinamasa told Parliament on Wednesday.

“All in all, the amount which will be paid to bank account holders will be around $15 million, then of course the balance is expected to be paid to those who come to the Zimpost and the Peoples’ Own Savings Bank (POSB) stations.”

He said all those with cash will have to come to POSB branches and would be paid their money over the counter.

“With respect to those who have bank accounts, the money will be paid into the bank accounts by the financial institutions,” said the minister.

The government has set aside $20 million towards the demonitisation programme, which is expected to end in September.

On the first day of the demonitisation programme, scores of people swarmed banking halls in major cities to exchange old Zimbabwe dollar notes and coins for US dollars.

Long winding queues were outside banking halls such as Stanbic and Steward Bank with people carrying old notes in plastic bags and handbags.

However, many expressed disappointment on the value US dollar index in return for their old notes.

RBZ has said payment would be made to anyone who was a holder of a Zimbabwe dollar denominated bank account as at December 31, 2008. A flat $5 will be paid into every account that was held with a balance of zero to Z$175 quadrillion.

For any Zimbabwe dollar balances above Z$175 quadrillion, payments have been pegged at a rate of $1 to Z$35 quadrillion.