HomeBusiness DigestIMF Windfall for use in Next Budget

IMF Windfall for use in Next Budget

THE US$510 million made available by the International Monetary Fund would only be used  when a new national budget comes into effect, the Minister of Finance Tendai Biti has said.

Zimbabwe, together with other countries who are members to the IMF last month got a General Special Drawing Rights (SDR) allocations which was followed by a special allocation  to alleviate the impact of the global financial crisis.

A decision to provide funds to countries that are members to the IMF was reached by the G20 when it met in London in April this year.

Funds allocated to Zimbabwe have inflamed the conflict  between the Reserve Bank of Zimbabwe and the Finance ministry.

Biti said the funds which were allocated to Zimbabwe late last month would only be administered through the mechanism of a budget which means this will be in the coming budget  towards year end.

This is a new twist in the battle between the Finance ministry and the central bank.

In fact the issue of the control and allocation of the fund is a proxy war signifying the continuing conflicts between Biti and RBZ governor Gideon Gono.

Addressing a press conference on Wednesday, minister Biti said the International Financial Organisation Act of 1980 gave  Treasury authority over funds released by international financial institutions.

This means that the funds released by the IMF would now be under the direct control of Treasury.

Biti said there was need for a proper fiscal programme to administer the allocation of the fund. He said the US$510 could not be used to destroy fiscal discipline which has been achieved since the beginning of the year.

“The Special Drawing Rights have not been obtained because of the special effort or special genius of an individual. They were allocations which were made at a global level through a global instrument that is the Bretton Woods Institutions.

“The SDRs are a vote of credit into the Zimbabwean account and they have to be accounted for through a budgetary process and approved by a budgetary process,” said Biti.

The ministry would also consult with a number of stakeholders, and has already started receiving letters recommending how the money should be used. Biti said the priority areas for the funds would be infrastructure development, which would get the bulk of the allocation, lines of credit for the export sector at concessionary rates and budgetary support since the cash budget was strenuous.

However, the US$510 million is a far cry from what the country would need for infrastructure development as the money would be gobbled up by one or two projects.


Leonard Makombe

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