Ncube to use IMF funds to support Zimdollar

Source: Ncube to use IMF funds to support Zimdollar – NewsDay Zimbabwe

FINANCE and Economic Development minister Mthuli Ncube said the government would use more than half of the $961 million allocated by the International Monetary Fund (IMF) in the form of special drawing rights (SDRs) to support the Zimbabwe dollar.

Speaking to Bloomberg on Tuesday, the same day he (Ncube) and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya confirmed the almost US$1 billion allocation from the Bretton Woods institution, Ncube said: “For the support of the currency, we want to hold back about $500 million.”

Zimbabwe abandoned a 1:1 peg between the RTGS dollar, a precursor to the reintroduced Zimbabwe dollar, and the greenback in February 2019.

The currency now trades at 85,82 to the United States dollar and as high as 150 on the black market, a plunge that has made it difficult for the government to have it accepted locally and it is generally not usable outside the country.

Zimbabwe abandoned its currency in 2009 after inflation rose to 500 billion percent, according to the IMF and legalised trade in a range of currencies including the US dollar and South African rand.

Ncube said the country’s remaining SDRs will be used to support the acquisition of COVID-19 vaccines, investments in schools, hospitals and roads and other priorities.

Revolving funds will also be set up to help manufacturers and mining companies buy new equipment and to revive the horticulture industry by encouraging the cultivation of roses, macadamia nuts and blueberries, Ncube added.

Meanwhile, the Vendors Initiative for Social and Economic Transformation (Viset) has urged government to use part of the money to protect vulnerable people.

“Social protection, particularly for the informal sector which is now undoubtedly the place where the majority eke a living, cannot continue to be provided for  through piece-meal, knee-jerk reactions such as ‘cash transfers’ which cannot be verified as to which means will have been employed in administering the transfers,” Viset said in a statement.

Viset added: “As informal sector representative bodies, we will not continue to aid the illusion that our members will benefit from these facilities yet we will not have been consulted from the beginning as to the modalities that can be applied.”

Viset urged government to ensure that facilities such as the SDRs make a meaningful impact in the grassroots communities if the country is sincere in its quest to attain economic prosperity for all.

— Bloomberg, additional reporting by Lorraine Muromo and Obert Siamilandu