IMF funding to accelerate economic recovery

04 May 2022

The $961 million funding into Zimbabwe’s economy by the International Monetary Fund in 2021 will drive the economic recovery, according to insurance group, First Mutual Limited (FML).

The firm said the government will likely use the funding to kick start a series of infrastructure projects designed to stimulate Zimbabwe’s economy following the pandemic.

“The Ministry of Finance and Economic Development is projecting that the economy will recover, with growth projections of 5.5% in 2022 led by infrastructural development as well as increases in the output of the major sectors for the economy including mining and agriculture,” according to FML chairperson Amos Manzai.

“The International Monetary Fund’s allocation of Special Drawing Rights (SDRs) to mitigate against the impact of COVID-19 will enhance recovery prospects for the country. The group will take advantage of its diverse business portfolio, existing and new strategic partnerships, as well as its regional footprint to galvanise a sustained growth trajectory in the future,” he went on to add.

Back in September, the country’s finance minister, Mthuli Ncube said the funding will be guarded by three top bankers, who will report to President Emmerson Mnangagwa each month, News Day reports.

The sectors most impacted by the pandemic will take priority for this IMF funding, as the finance minister attempts to revive the economy that suffered a 4% slowdown as the crisis hit in 2020. The tourism industry reported losses of $1 billion due to the pandemic, the largest decline in four decades.

Ncube said of the funding: “We received just below US$1 billion in SDRs, so as I speak, because we haven’t used a cent at all, they just count as reserves. So in principle we have about US$1 billion which is supporting reserves and obviously, as we draw down, we use that on development. But whatever is unused still remains to be accounted for as part of the country’s reserves.

“SDRs are accounted for as reserves so at any point in time we are supporting the reserves build-up agenda. But over time we will obviously invest in these development projects only up to a point where then the remainder is kept behind in SDR form to bolster our reserves and any other contingency funding required in the future,” he added.