The Zambian Government has said that it is pleased with the approval by the IMF Board of Directors of a general allocation of Special Drawing Rights (SDRs) equivalent to US$ 650 billion, for eligible member countries.
In Zambia’s case, this translates to approximately US $1.3 billion and doubles the country’s foreign exchange reserves. The decision to increase the general allocation was made by the IMF Board on 2nd August, 2021.
Yesterday, Zambia attended a virtual meeting between the IMF African department and several African countries. The virtual meeting was Chaired by ABEBE AEMRO SELASSIE, Director of the IMF African department. Zambia was represented by Secretary to the Treasury FREDSON YAMBA, Bank of Zambia Governor CHRISTOPHER MVUNGA and other Senior Government Officials.
During the meeting, modalities for disbursement and use were discussed. The SDRs will be credited to all member countries in proportion to their existing quotas. In the case of Zambia, this will translate to approximately US $1.3 billion. The amount will substantially boost the country’s foreign exchange reserves. The increase in reserves will help build external resilience and support the current relative stability in the foreign exchange market. This in turn is expected to facilitate foreign and domestic investment flows, going forward.
Commenting on the development, the Secretary to the Treasury has reiterated the Government’s commitment to utilizing the funds in accordance with prudent fiscal management principles through the consultative Medium-Term Expenditure Framework (MTEF) and the national budget. To ensure effective checks and balances, special accounting and reports on the utilization of the proceeds will also be undertaken.
Expenditure focus for the allocation will be on areas that will directly address the health and economic impacts of the COVID-19 pandemic. Elevated attention will also be directed at helping to restore livelihoods of vulnerable Zambians and limiting the negative impact of the pandemic on the economy.
The resources from the IMF will definitely assist the country to attain the aspirations of the Economic Recovery Programme and lead to economic stabilisation and positive growth. The decision of the Fund will become effective on 23rd August, 2021.