ZIMBABWE has received a more than $500m windfall from the International Monetary Fund (IMF) after 10 years of financial restrictions from the institution, following the injection of $283bn into the global economy to boost member countries’ dwindling foreign exchange reserves.
The money, most of which has already been deposited with the Reserve Bank of Zimbabwe, will offer only temporary respite for an economy facing a severe liquidity crunch. Local markets have failed to stabilise despite the inclusive government which came into office in February.
According to the IMF, Zimbabwe received $408,7m on August 28. About 103,6m is expected to be in the central bank account by Monday, bringing the total to 512,3m.
The IMF has provided a total of $283bn, of which $250bn has been paid to about 186 countries in a bid to contain the global financial crisis, the worst since the Great Depression in the 1930s.
About $100bn of the general allocation was set aside for emerging markets and developing countries, of which low-income countries will receive more than $18bn. The general Special Drawing Rights (SDR) allocations were made on August 28 to IMF members who are participants in the SDR scheme, in proportion to their existing quotas in the Fund. Quotas are based broadly on the size of a country’s economy relative to the rest of the world’s. Under this formula, Zimbabwe is entitled to $512,3m.
The SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies — the US dollar, the euro, pound sterling and the Japanese yen. The current exchange rate is SDR 1: 1,56.
The allocation will provide each participating country with SDRs in amounts equivalent to about 74% of their quota. Allocations varied from 4m for small economies such as Bhutan to 42bn for the US.
Official sources said yesterday Zimbabwe’s central bank and treasury authorities were engaged in discussions about how to use the money to breathe life into the ruined economy. The sources said government officials were in high spirits about the IMF financial support after months of largely unfruitful scrounging for funds all over the world.
President Robert Mugabe previously described the IMF as an “agent of imperialism” and “evil”.
Zimbabwe needs up to $10bn for economic recovery; slightly more than 1bn has been secured since February.
SA, Africa’s biggest economy and Zimbabwe’s main funder of late, got more than 2bn from the IMF.
Zimbabwe last got money from the IMF in 1999 when the multilateral lender approved standby credit of about 193m to support its economic programmes. For years Zimbabwe was suspended from receiving IMF disbursements and technical aid, but it survived many attempts to have its voting and related rights terminated for nonpayment. Expulsion from the IMF would have ensured that Harare did not receive the current 500m.