'Timely IMF boost saved Zimbabwe'

A PAN African lender has ranked Zimbabwe among the biggest beneficiaries of the US$33 billion injected into the region's economies by the International Monetary Fund (IMF) last year.

Africa Export Import Bank (Afreximbank) said in a new paper released last week that foreign currency-starved Zimbabwe's US$961 million lifeline doubled Harare's thin forex reserves and gave the country capacity to salvage crisis-hit firms through financial support.

In total, the IMF injected US$650 billion into global economies to help countries ride out pandemic curbs after extensive battering from hard lockdowns, whose effects are still crippling some of the region's biggest firms.

"The SDR allocation, which invariably boosted Africa's forex reserves, had a particularly pronounced impact in countries such as Zambia and Zimbabwe, where it more than doubled existing reserves," Afreximbank said in a review of the IMF's SDRs, which was released last week.

Afreximbank said SDRs had boosted Africa's reserves including benefitting vulnerable nations confronted by monetary and fiscal challenges.

"The forecast expansion in output is predicated on several other factors, including the improving macroeconomic and policy environment. In that regard, the exceptional support offered by the IMF has been invaluable. The Fund's unconditional allocation of SDRs worth around US$33 billion to African nations in H2 2021 was timely. It had an important impact on macroeconomic buffers and will have positive spillovers for macroeconomic stability and growth in the short and medium-term," the lender added.

Two weeks ago, the Mines and Mining Development ministry said it would be releasing US$10 million of its SDR allocation to help rebuild capital-starved Zimbabwean mining houses, which have been scouting for about US$5 billion to return to full throttle production following waves of turbulences in the past two decades.

"The ministry was allocated US$10 million from the SDRs and we are working with Treasury and banks to make sure this money is lent to the mining industry," Onesimo Mazai Moyo, permanent secretary in the Mines Ministry told a recent mining conference in Victoria Falls.

"Beneficiaries will include small-scale miners because we want inclusive growth. We are establishing a facility with banks, because they are skilled in that area," he said.

Afreximbank added: "While the three largest economies in the region (Egypt, Nigeria and South Africa) received nearly one- third of Africa's allocation, its economic impact has been most significant among low-income countries, which collectively received US$13 billion.

"For most of these countries the allocation has been substantial relative to the size of their economies accounting for more than 5% of gross domestic product for many (Burundi, Central African Republic, Libya, Sierra Leone and Zambia) and over 10% for others (Liberia and South Sudan."