‘$1.3M IMF. PACKAGE WILL BOOST CONFIDENCE’
By BUUMBA CHIMBULU
THE US$ 1.3 billion Special Drawing Rights (SDRs) to be allocated to Zambia this month will improve international confidence in the economy and assist in stabilising its macroeconomic environment.
Zambia is this month expected to receive US$ 1.3 billion SDRs from the International Monetary Fund (IMF) to ease its economic stress, which has been brought about by the pandemic.
The reallocation of this fund could be crucial in assisting African countries such as Zambia in building more resilience in the economy as well as stabilise its macroeconomic environment, says Policy Monitoring and Research Centre (PMRC) Executive Director, Bernadette Deka-Zulu.
Ms Deka-Zulu stated that it was anticipated that the SDRs would improve international confidence in Zambia’s economy, thereby trigger local and international investments.
She indicated that this would help the Zambian Government cope with the impacts of the pandemic and improve the post Covid-19 economic recovery prospects while providing crucial support to Small and Medium-Sized Enterprises (SMEs).
“A critical component of the Zambian economy is the SMEs that were adversely affected by the pandemic. The Covid-19 pandemic has caused disruption to business activities in Zambia and this has in turn affected the ability of SMEs to remain afloat.
“The IMF injection could provide crucial support in addition to the initial bailout package provided by the Zambian Government in assisting SMEs improve their business operations during the pandemic”, she said in a statement.
Ms Deka-Zulu stated that it should be noted that this injection to the Zambian economy came before a possible IMF bailout which was currently still under advanced negotiation.
The injection, she said, came at a time when Zambia’s international reserves had increased to approximately US$1.4 billion, representing 3.5 months of import cover.
“In addition to providing the much needed liquidity to the country, the allocation to Zambia will assist in paying for needs related to healthcare such as oxygen and personal protective equipment.
“Furthermore, the support could be provided to vulnerable groups such as those with disabilities as well as women and youths,” Ms Deka-Zulu said.
