Finance and Economic Development Minister Mthuli Ncube has said that Zimbabwe will invest its International Monetary Fund (IMF) Special Drawing Rights (SDR) for future growth based on the guidelines he expects from IMF.
The IMF board of governors recently approved a US$650 billion SDR general allocation for its member countries as a way of boosting global liquidity and among these countries is Zimbabwe.
Speaking in Parliament on Thursday Mthuli Ncube explained how whether he had factored in the SDR allocation in his budgeting.
“Have we factored it into the equation? Not yet. Legally, we can only factor it in once we get a note from the IMF that we have been awarded and the amount is known. That is when we will factor it in and I will come back to Parliament to seek permission on how to use that windfall,” he said.
“Indeed, it is promising to a very handsome windfall but let us not waste it on useless consumption. It should go towards I would say production, investment, stabilising our currency and infrastructure but also not forget our socio-economic sector, health and education. We will still need to do more. The money should not be spent all at once,” he added.
In 2009, Zimbabwe was allocated SDR 262 million under the general allocation and SDR 66.4 million under the special one-time allocation provided by the Fourth Amendment to the Articles of Agreement.
At the time of the 2009 allocations, Zimbabwe had arrears to the PRGT and predecessor Trusts totalling about SDR 89.4 million. Under a General Allocation, a participant’s right to use SDRs cannot be suspended on account of arrears to the General Department or to Fund Trusts.
However, the Fourth Amendment provided for a limited exception to this principle of separation. Under this exception, the SDRs allocated under the Fourth Amendment to a participant with overdue repurchases and charges in the GRA, overdue principal and interest on loans in the SDA, overdue charges and assessments in the SDR Department and overdue liabilities to the Fund as Trustee would not be made available to the participant, but rather would be deposited and held in an escrow account in the SDR Department.
Minister Ncube added that the SDRs allocation may fund additional spending if Parliament okays it.
“However, I must say that when we get SDR allocations, I need to come back to Parliament to seek permission on how we should spend that. That really would constitute a supplementary budget. Let us wait until we get there before I come back to Parliament,” he said.