Zimbabwe to Use Special Drawing Rights Facility to Pay Off IMF Debt

Finance Minister Tendai Biti says Zimbabwe will use US$140 million of a US$500 million Special Drawings Rights facility to pay down debt to the International Monetary Fund which is preventing the country from obtaining any new loans.

Biti said in a statement that the payment will allow Zimbabwe to tap development funds under the global lender’s Poverty Reduction and Growth facility.

He said Zimbabwe hopes for the immediate release of US$93 million that was withheld by the IMF when the country got its share of crisis-adjustment funds in 2009.

But economists doubt the IMF will release the funds due to other debts.

Zimbabwe owes the African Development Bank some US$400 million and the World Bank US$1.2 billion, plus more than US$5 billion in other international loans.

Economist Daniel Ndlela said Biti has made the right decision to settle the debt to the IMF using the 2009 global crisis funds. “But as long as we still owe other institutions, we are still not out of the woods,” Ndlela said.

Economist Eric Bloch said Zimbabwe is not likely to receive financial support from international organizations until it has gotten current on its payments.

Biti said the SDR equivalent of US$150 million has so far been used for the purchase of agricultural inputs for the 2009-2010 crop season and infrastructural projects, and US$20 million for lines of credit for Zimbabwean industry under the Zimbabwe Economic and Trade Revival Facility administered by Interfin Bank.

The funds were spent to overhaul the Hwange Thermal Power Station, National Railways of Zimbabwe track and rolling stock, and Bulawayo City Council’s sewer and water distribution system, to upgrade broadcasting equipment, to resume construction of a Matabeleland water pipeline and for housing in Kwekwe and Harare.

Biti said SDRs equal to US$215 million are held at the IMF as national reserves.