Treasury, banks in dispute over civil servants pays

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Zimbabwe’s government and commercial banks are locked in a dispute over the costs relating to relief offered to civil servants and pensioners during the coronavirus pandemic.

The state had agreed to reimburse lenders for administrative charges relating to a foreign-currency allocation totaling $36 million a month, but the details are still to be worked out, Ralph Watungwa, president of the country’s Bankers Association, said by phone.

The Treasury said there is no need for lenders to be refunded.

“It’s a question of ethics on the part of the banks,” Finance Minister Mthuli Ncube said in a statement.

The three-month coronavirus allowance of $75 was announced in June and is paid in addition to Zimbabwe dollar-based salaries.

The southern African nation is in an economic crisis, with inflation surging to more than 800% amid a collapse in the local currency and households face crippling shortages of everything from fuel to food. Teachers, nurses and bankers are demanding to be paid in U.S dollars, despite a shortage of foreign currency.

The central bank has been asked to intervene in the dispute, Watunga said.

Annual inflation in Zimbabwe accelerated to 837.53% in July, the Zimbabwe National Statistics Agency said on Saturday in a Twitter post. The year-on-year rate for June was 737.3%.

The monthly rate was 35.53%, up from 31.7% in June.

The southern African nation is struggling with food and fuel shortages and a local currency that has imploded since being re-introduced last year after a decade-long hiatus. The previous bout of hyperinflation, during which the annual rate of price growth surged to 500 billion percent, according to the IMF, forced the government to drop the Zimbabwe dollar and foreign currencies became legal tender in 2009.