THE International Monetary Fund (IMF) today will credit Namibia more special drawing rights (SDR), opening up another avenue for affordable borrowing for the country.
The crediting would be proportionate to existing quotas in the fund, and follows the recent approval by the fund’s board to release N$9,4 trillion in special drawing rights for its members.
Namibia has a 0,04% quota with the fund, and, depending on how much would be credited, this would make available a few million dollars for the country’s kitty.
Basic calculations show that Namibia could receive more than N$350 million worth of special drawing rights (SDRs).
Announcing the trillion-dollar purse, the fund’s managing director, Kristalina Georgieva, early this month said the approval was a historic decision, and a shot in the arm for the global economy at a time of unprecedented crisis.
She said it would particularly help the most vulnerable countries that are struggling to cope with the impact of the Covid-19 crisis.
The IMF said at least US$275 billion of the new allocation would go to emerging markets and developing countries, as well as low-income countries.
One key option is for members with strong external positions to voluntarily channel some of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT).
Concessional support through the PRGT is currently interest free.
This means Namibia could obtain an interest-free loan of more than N$350 million from the Washington-based fund.
Namibia has not borrowed money under the PRGT.
The allocation of SDRs was welcomed by many, while others feared it could be a debt trap for some countries.
PSG Namibia’s Michelle Louw says Namibia is not obliged to borrow, even though there is an allocation.
“Judging by Namibia’s quota allocation and the amount approved from the general allocation of special drawing rights to be available by the end of August, if Namibia were to also borrow 100% of its newly awarded SDRs, the loan would only amount to less than 4% of Namibia’s current outstanding government debt,” she says.
On a possible debt trap, she said: “The availability of further borrowing facilities does not mean Namibia is obliged to draw on these facilities.”
Email: bottomline@namibian.com.na
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