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  • Sunrise of currency reform - Index of articles and reports on Zimbabwe's new currency reforms

  • Presidential powers invoked validating changes
    The Herald (Zimbabwe)
    August 01, 2006

    PRESIDENTIAL powers have been invoked to give immediate effect to the currency reforms announced yesterday.

    Parliament will have have to make these laws permanent within the next six months.

    President Mugabe used his special temporary powers to promulgate the Presidential Powers (Temporary Measures) (Currency Revaluation) Regulations 2006 - which were published in an extraordinary Government Gazette yesterday.

    Under the regulations, old bearer cheques in circulation expire at midnight on August 21 2006 and the Reserve Bank cannot pay anyone out on these after that date.

    Financial institutions cannot accept or exchange old bearer cheques, after that deadline although traders or parastatals can still exchange them before the close of normal business hours on the August 22, 2006. This allows them to accept customers- money right up to the deadline. Banks have to exchange currency, within the limits, at exactly $1 000 old currency for $1 new currency.

    Companies bringing in more than $5 billion (or such other amounts as the Reserve Bank may specify by notice to financial institutions generally,) or individuals bringing in more than $100 million (or such other specified amount must have a tax clearance certificate and declaration of source. This also applies if there are two or more amounts of old bearer cheques exceeding these limits brought in within seven consecutive working days.

    Banks have to issue one-year currency stabilisation bonds for any sum in excess of the limits and then report within 48 hours to the Bank Use Promotion and Suppression of Money Laundering Unit, which will inquire into the source of the cash.

    If the cash is found to be proceeds of detainable offence, it will be confiscated and dealt with in accordance with Bank Use Promotion and Suppression of Money Laundering Act and the bond will be cancelled.

    If the money is not illegal, the bond will be redeemed on maturity for its face value together with interest at the monthly average rate for Treasury Bills calculated from the month of issue.

    The regulations compel traders, parastatals, financial institutions engaged in sale of goods and services to have their systems confirm with the new monetary arrangements and any exemption will be granted if the authorities are satisfied that such an exemption will be in the public interest and promotes the objective of the smooth transition from the old to the new currency system.

    As a result of the changes, firms shall be required to make two sets of financial statements for accounting, taxation and other purposes.

    The first six months will be reflecting the old currency while the last six months will show the new currency system. Firms should first seek authority for exemption.

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