Zimbabwe receives part of IMF funding

HARARE – The International Monetary Fund said on Friday it had transferred around US$400 million in IMF special drawing rights to Zimbabwe under a US$250 billion global agreement to bolster the reserves of the IMF’s 186 member countries in the wake of the worldwide financial crisis.

The IMF said, however, it would withhold another US$102 million of Zimbabwe’s allocation by placing it in escrow until the country had cleared its US$140 million IMF debt.The SDR payments are separate from IMF programme financing, which comes with strict policy conditions, and goes into a country’s foreign exchange reserves. To turn SDRs into hard currency, an IMF member must reach an agreement with another member to buy the SDRs.’The general SDR allocation of SDR 262 million (about US$400 million) was deposited to Zimbabwe’s account with the IMF. There is no conditionality on the use of this allocation,’ an IMF spokesman said.’The special SDR allocation of SDR 66 million (US$102 million) will be escrowed until Zimbabwe clears its arrears to the PRGF-ESF Trust,’ the spokesman added.The SDR, the IMF’s internal unit of account, is made up of a basket of euro, yen, sterling and dollars and each country’s SDR allocation is based on the size of its IMF quota share, which is broadly calculated according to the size of the economy, trade and reserves.The one-time allocation of SDRS, agreed among the G20 in April to bolster global liquidity, was made on August 28. In addition, a special allocation, equal to about US$33 billion, was approved as a way to make the payout more equitable for countries that joined the IMF after 1981.IMF rules forbid the institution from agreeing to a financing programme with a country that is in arrears to the Fund. IMF official figures show Zimbabwe currently owes the institution some US$140 million.The country has suffered a decade of economic meltdown, worsened by the withdrawal of Western funding over policy differences with President Robert Mugabe.However, the IMF has agreed to technical assistance for the country since the formation of a unity government this year between Mugabe and opposition leader Morgan Tsvangirai.Earlier on Friday, Zimbabwe’s Herald newspaper quoted Reserve Bank of Zimbabwe Governor Gideon Gono as saying the IMF had released US$400 million to Zimbabwe, with another $110 million set to come next week.’I can confirm that the Reserve Bank of Zimbabwe did receive the funds. I have … invited my Minister of Finance (Tendai Biti) for us to discuss the modalities of operationalising usage of these funds,’ Gono told the paper.Gono, Biti and other officials were not immediately available to confirm the Herald report.In a letter to Biti dated August 24, the IMF’s acting director for the African Department, Mark Plant, said countries with arrears would not receive aid until they had cleared them. – Nampa-Reuters