eBusiness Weekly
Tapiwanashe Mangwiro
On August 23, 2021, the International Monetary Fund (IMF) undertook a general allocation of Special Drawing Rights (SDRs) of SDR456 billion to all its 190 members.
These SDRs have a monetary value of US$650 billion.
Zimbabwe received an allocation of SDRs amounting to SDR677.4 million (US$958 million) from the IMF under the General Allocation. In 2021, a total of US$140 million was withdrawn from the US$958 million of the IMF SDRs meant to deal with Covid-19 effects.
The Special Drawing Rights are an international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries and can be converted into a basket of international currencies comprising the US dollar, Japanese yen, euro, pound sterling and Chinese renminbi.
A total of US$70 million was withdrawn in October 2021, which was used for capital projects across three sectors according to Finance and Economic Development Minister Professor Mthuli Ncube.
Speaking to Business Weekly recently Mthuli said; “The drawdown of October last year was down to fund some critical projects in the Ministry of Health and Child Care, Transport and Infrastructure Development and also to sort out some water issues”.
Of the US$70 million withdrawn in October 2021, health infrastructure gobbled US$35,6 million which was used for capacitating hospitals and also renovating some of the hospitals.
Ministry of Transport and Infrastructure Development got US$17,7 million dollars to fund the Harare — Beitbridge highway, which is critical to trade in the region and Zimbabwe at large.
Work on the road that stretches over 580 kilometres from Zimbabwe’s capital city to the Limpopo will involve the dualisation, rehabilitation and widening of the existing roads from the current seven metres width to 12,5 metres recommended by the Southern Africa Transport and Communications Commission.
Government has also embarked on rectifying water provision around the country and ensuring that there is enough water for irrigation, through dam construction. A total of US$16 million was used for dam construction according to Mthuli.
Mthuli added ; “As we said before, the funds will provide a huge stimulus to the economy and will be used prudently, with accountability and transparency to support projects in areas like, investments in social sectors namely health, education, and the vulnerable groups.
“Also the productive sectors which include value chains, infrastructure investments and foreign currency reserves and a contingency fund.”
According to the SDRs use plan, the minister dedicated a total of US$280 million to foreign exchange reserves. On December 9, 2021, Treasury released a total of US$70 million for the sole purpose of strengthening foreign exchange reserves.
Earlier in the week, the minister told the Parliament’s Portfolio Committee on Budget, Finance and Economic Development that for 2022 there was US$145 million that will target social services, agriculture, industry and infrastructure development.
“Health will get US$25 million and education US$10 million, while a US$30 million revolving fund for the agricultural sector would be established with this facility targeting the horticultural sector as part of efforts to revive exports,” Mthuli said.
A further US$20 million will go towards revival of small-holder irrigation schemes across the country, as a US$30 million revolving fund will be established for industry retooling. mainly for the cotton and garment manufacturing sectors.
