Firms start drawing SDRs

PRODUCTIVE sectors have started drawing from the US$958 million special drawing rights (SDRs) received from the International Monetary Fund to facilitate industry capacitation and local employment.

The IMF said the injection of SDRs was intended to help the global economy cope with the massive setback induced by the Covid-19 pandemic and the need to build reserves.

IMF members don’t have to meet any specific requirements to receive their share of an allocation and have the right to use the SDRs for whatever they want.

In 2021, under the general allocation of US$650 billion, Zimbabwe was allocated US$958 million by the IMF.

In a recent interview during a tour of Arenel Foods Limited and Baker’s Inn in Bulawayo, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, told Business Chronicle that while he did not have off-hand statistics on how much industry players have withdrawn, some companies had started utilising the SDRs for industry capacitation.

“Some companies have drawn from that fund and not just that fund, but the horticulture fund and other funds for irrigation. The fund was not just covering industry, but covering irrigation equipment and supporting specific value chains.

“For instance, this (bread manufacturing industry) is a value chain from the farm in terms of wheat to bread so this is the kind of support that we will be targeting those funds at.”

He said if any companies are struggling to access the funds due to any bottlenecks, they should come forward and make presentations as the Government is committed to ensuring that industries retool to increase productivity.

Prof Ncube said the Government has also started paying legacy debts to companies, with debts not exceeding US$1 million already paid up.

He revealed this after Arenel Foods Limited officials indicated that it has funds that were blocked in what has become known as legacy debt.

Blocked funds is money that a foreign company or organisation earns in a country, but cannot be paid out right away due to Government laws, capital flow constraints, or unavailability of foreign currency.

The Government assumed responsibility for blocked funds, which are essentially debts, through Finance Act No 7 of 2021 which provided the list of claimants approved and registered by the Reserve Bank of Zimbabwe through the commercial banks of claimants.

“Central Government took over legacy debts which were blocked funds by the Reserve Bank of Zimbabwe. We have a payment plan, but I will endeavour to find out what is owed to Arenel Foods so that we can be supportive to them.

“I must say those who had legacy debts below a figure of US$1 million were paid in cash and those who were not paid should come forward and we will pay them,” he said.

Prof Ncube said the Government is working on a payment plan to pay off companies whose funds exceed US$1 million through a bonding instrument.

He said there is a need for the Government to fine-tune the electricity tariff structure which companies are complaining that it affects their operations.

Arenel Foods Limited had told Prof Ncube that power challenges had forced it to partly close one of its plants, as the tariff system was negatively affecting operations.

The company resorted to importing diesel to complement its operations.

“I will raise this issue with the Minister of Power and Energy Development and also with Zesa so that this thing is closed out. It can’t be that you have closed part of the factory because we have failed to bill you properly,” said Prof Ncube. — -chroncile