IMF CASH ROLLS IN
BY OLIVER SAMBOKO
THE US$ 1.3 billion Special Drawing Rights from the International Monetary Fund (IMF) has boosted foreign reserves to over US$3 billion the highest it has ever been since independence.
Former Finance Minister Bwalya Ng’andu had earlier assured that a Covid-19 relief package was coming after he held talks with officials from IMF.
In July, the Ministry of Fi- nance announced that the IMF Board had approved a special allocation of US$1.3 billion in the US$650 billion global fund- ing to mitigate the effects of Covid-19 which had ravaged several nations.
IMF resident representative for Zambia, Preya Sharma explained early this month that countries Special Drawing Rights (SDR) allocations could be used to exchange for hard currency as well as be used to boost fund member countries foreign exchange reserves.
And speaking in June, IMF managing director Kristalina Georgieva said the newly created SRDs would be credited to IMF member countries in pro- portion to their existing quotas in the Fund.
Ms Georgieva said about US$275 billion of the new allocation would go to emerging markets and developing countries, including low-income countries.
“This is a historic deci- sion- the largest SDR allo- cation in the history of the IMF and a shot in the arm for the global economy of unprecedented crisis. The SDR allocation will benefit all members, ad- dress the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the Covid-19 crisis,” she said.
Meanwhile, economist Yosuf Dodia has said the $3 Billion dollars being held by the Central Bank in foreign reserves was enough to cover three months of import cover in an event that the coun- try’s economy faced challenges.
Mr Dodia explained that
the country’s statistics show that Zambia exports copper and other prod- ucts worth roughly $1 Billion per month, while the consumption in terms im- ports is almost the same.
“The $3 Billion dollars in foreign reserve can cov- er 3 months import cover in an event that our econ- omy faced challenges,” he said.
Mr Dodia observed that the biggest challenge for the country is not so much on foreign reserves but there is need to concen- trate on stimulating the economy so that instead of consuming the foreign reserves, the economy should be contributing in building up the reserves.
He also said the newly appointed Finance Min- ister Dr Situmbeko Mu-sokotwane had a daunting responsibility ahead of ensuring that the country comes up with a stimulus national budget for 2022 that will support produc- tion and enable the coun- try to service foreign debt.
Mr Dodia said the stim- ulated economy will not only create more oppor- tunities for the Zambi- an people through the creation of jobs but also help the country to attract more foreign investment
President Hakainde Hi- chilema said last week, his administration had in- herited empty coffers, but this has been fact checked to be wrong as the country had five.