BANKS have agreed with the Government on the modalities of the opening Foreign Currency Accounts (FCAs) for civil servants at zero costs and also to charge minimal costs so that the US$75 is not demeaned by banking and transactions costs.
This comes as civil servants and pensioners are set to get US$75 and US$30 respectively in allowances to cushion them against inflation and the Covid-19 pandemic.
Apart from the cushioning allowances, Government also announced a 50 percent salary increment for its workers.
In order to ensure that civil servants get value for money, which will come in plastic form to prevent leakages onto the parallel market, President Mnangagwa last week directed that the Ministry of Finance and Economic Development, along with the Reserve Bank of Zimbabwe (RBZ) engage banks.
Under a facility that has been agreed between banks and Government, the FCAs can be opened online and in some cases free of charge, Presidential spokesperson Mr George Charamba said.
“I happen to know that quite a number of banks have already offered a zero cost FCA facility to civil servants, but also offered to say the FCAs can be opened online, so you don’t have to go to the nearest town and thirdly to link those accounts with the employment numbers of every civil servants and the bank he or she uses,” he said.
It costs anything between US$10 and US$20, depending on the bank, to open an FCA in Zimbabwe and many civil servants were worried that they might not be able to secure such accounts.
Determined to ensure that civil servants who have no other source of income, apart from their monthly salaries, get the best of the US$75 cushion allowance, which will run for three months subject to review, President Mnangagwa assigned the Ministry of Finance and RBZ to ensure that the implementation of the facility will be tailored to benefit the worker wholesomely.
“Some civil servants are asking how do we open Foreign Currency Accounts, how do we do this inexpensively, by way of the cost of opening an FCA and also by way of doing so. His Excellency the President gave a directive to the Ministry of Finance and Economic Development and the Reserve Bank to say the execution or implementation of this facility of US$75 and US$30 should not have the unintended effect of demeaning the welfare threshold of civil servants.
“He said go and confer with the banks and retailers and come back with modalities of implementing this facility which is least onerous on the beneficiary, in this case the civil servant and the pensioner.
“I also happen to know that the Governor last week met with the bankers, the Governor met with retailers on the instruction of the Finance Minister who was responding to a directive from the President.
“The whole idea is to make sure that opening an FCA is at the least cost, the transaction is also at least costs and that it brings greater value and convenience to the civil servants,” said Mr Charamba.
To guard against the potential misuse of the US denominated cushion allowances, that come to a combined US$32 million per month for both civil servants and pensioners, the Government decided to secure the money through forms of FCA accounts.
Key considerations that the Government took include the market shocks implied in an increase on its wage bill from 30 percent of annual revenue to 40 percent.
Apart from having to contend with an increased wage bill, the Government, which is already stretched by the novel pandemic that entails lots of imports, also wanted to minimise the disruption on its balance sheet.