The clearance of the debt means the country can now access resources under the IMF’s General Resources Account.
Despite Zimbabwe regaining its voting rights last year, which it had lost in 2003, it is still barred from benefiting from the GRA resources owing to the debt under the PRGF.
In an update on the use of the SDR, Finance minister Tendai Biti said of the US$505 million that Zimbabwe got, US$150 million was used to meet critical needs.
“Furthermore, the government has maintained US$215 million SDR balance at the IMF as national reserves, with another US$140 million earmarked towards settlement of the country’s obligations to the IMF’s Poverty Reduction and Growth Facility,” Biti said.
Biti said of the US$150 million that was withdrawn to meet critical needs, US$50 million was used to procure inputs for the 2009/2010 summer cropping season, US$80,46 million was allocated to infrastructure projects while US$19,54 million was allocated to fund the revival of local companies under the Zimbabwe Economic and Trade Revival Facility.
Clearing the PRGF debt would enable Zimbabwe to access the US$93,1 million which has been escrowed.
In August 2009, IMF Executive Board approved a US$250 billion (SDR161,2 billion) general SDR allocation to all the 186 member countries, in response to the global financial crisis.
A further US$33 billion (SDR21,5 billion) Special SDR allocation was made on September 9 2009.
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From the bailout, Zimbabwe was allocated SDR328,4 million (US$505 million) of which US$411,9 million was under the General SDR allocation of August 28 2009, while the Special allocation of US$93,1 million was escrowed pending the clearance of the outstanding arrears to the PRGF.
The clearance of the PRGF debt represents a major climb down by Biti, who had insisted that the IMF windfall would be used solely for reserves.
When IMF announced the bailout in 2009, central bank governor Gideon Gono had suggested that the money be withdrawn to clear the debt, among other critical needs.
The advice was ignored by Biti, who has the responsibility to deal with the Fund and to make withdrawals, under the International Financial Organisations Act (Chapter 22:09).
In terms of Sections 7 and 9 of this Act, Treasury and the Minister of Finance have the sole right and responsibility to deal with the Fund and to make withdrawals from the country’s SDR account at the IMF.
