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Biti sitting on US$165m!

by Byo24NEWS
31 Jan 2011 at 10:25hrs | Views
ZIMBABWE is sitting on about US$165 million that it got under the International Monetary Fund's Special Drawing Rights in August 2009 despite the country's crippling liquidity crunch that has hit civil servants, industry and new farmers, it has been learnt.

As a member of the IMF, Zimbabwe got a total of SDR338,57 million, which is equivalent to about US$526,9 million, but according to the fund's records as at December 31 last year, the country had only used US$270,2 million.

While Zimbabwe has the luxury to sit on such funds amid the liquidity crunch, countries like France, the United Kingdom, India and Canada have used large chunks of their IMF allocations.

It is understood that the funds are lying idle at the Infrastructure Development Bank of Zimbabwe (IDBZ) while there is uncertainty as to how all that has been withdrawn from the bank has been used.

The Minister of Finance, Mr Tendai Biti, is understood to be dictating the slow pace in the disbursement of the funds.
Minister Biti last Friday said he could only comment on the matter this week as he is out of the country attending the World Economic Forum, in Davos, Switzerland, while IDBZ chief executive officer Mr Charles Chikaura claimed that his bank was disbursing the funds although he failed to disclose details of the sectors of the economy that had benefited so far.

"The bank is satisfied with the take-up rate, which is consistent with agreed milestones of projects under implementation. To date, 75 percent of the funds have been disbursed," said Mr Chikaura.

In his 2010 National Budget presentation, Minister Biti said he had allocated the funds towards the budget. Some of the funds were also earmarked for the productive sector and clearing the IMF debt.

He said US$210 million was channelled towards fiscal requirements.

Under this allocation, US$58 million went to transport, US$57 million towards water and sanitation, US$15 million to health issues, US$7,5 million to education and US$71 million to unspecified issues.

US$50 million was set aside for procurement of grain while US$80 million was earmarked for extension of lines of credit to the productive sectors of the economy.

In addition, US$140 million was set aside for clearance of arrears to the IMF under the Growth and Poverty Reduction Facility.

The remaining US$25 million was maintained as a reserve.However, despite the claim by Mr Chikaura and the said allocations by Minister Biti, the IMF SDR Holdings and Allocations schedule as at December 31 last year showed that Zimbabwe still has about US$165 million that has not been taken up.

When Zimbabwe got the allocation, a storm of controversy engulfed the country, as debate on how to use the funds raged on.
There were suggestions that the funds should be used immediately to meet critical Government needs while others argued that Zimbabwe should hold these funds as strategic reserves for future use.

The policy direction that won the day, as adopted by the Ministry of Finance with the concurrence of the IMF, was that Zimbabwe holds the SDR money as strategic reserves.

A leading economist at one of the country's top financial institutions, who spoke on condition of anonymity, said almost a year and half after receiving the funds, there is little to show on the wisdom of keeping the funds as reserves.

"The whole programme seems to be in some unexplainable auto-pilot mode, leaving Zimbabwe with an incredible dichotomy of sitting on the so-called reserves whilst at the same time pleading with the international community and our neighbours in Sadc for assistance.

"This is where our own Parliament must play its role by calling for greater accountability on the part of the Minister of Finance in the interest of the economy," said the economist.

He said other countries that had benefited from the IMF programme wasted no time in gainfully deploying the windfall resources for maximum advantage.

"The irony is that some of those who have used the huge sums of their SDR money were in the forefront advising Zimbabwe not to use its SDR money," said the economist.

"Analysis of the IMF website as at 25 January 2011 clearly shows that the UK has utilised a whopping US$1,5 billion from its allocation.

"Other frontrunners who have used up their IMF funds profitably include Ukraine (US$2 billion), Venezuela (US$473 million), France (US$614 million) and India (US$1 billion).

"Certainly these countries are in much better liquidity conditions than Zimbabwe, yet they improved their conditions through the deployment of the IMF funds.

"Analysed from the viewpoint of men and women on the street, in farms, mines, factories and other disciplines of economic endeavour, the machinery of Government, particularly the Treasury, has let the masses down.

"It is time that those entrusted with positions of authority carry out their functions with no other objective than to advance the interests of the people.

"Right now, the country is engulfed in a cloud of uncertainty and apprehension over looming threats of job action by civil servants who, for two years, have been living off crumbs under the prognosis that there was no fiscal space. Yet, if one were to productively deploy the IMF funds, it would have unlocked phenomenal monetary value on two levels.

"First, the direct room such funds would have created in the budget would have allowed Government to modestly better the conditions of service for the civil service.

"Second, the productive deployment of the SDR money would have rejuvenated the economy, leading to job creation and a higher tax base for the fiscus, which through the long-proven multiplier effect could have benefited Government's fiscal standing.

"Clearly, as it is, we are shooting ourselves in the foot by blindly listening to poisoned pieces of advice from the West."

Source - Byo24NEWS