IMF SDRs not abused -RBZ Governor

Reserve Bank of Zimbabwe (RBZ) governor, Dr John Mushayavanhu, says on Wednesday part of the US950 million Special Drawing Rights (SDRs) that the country received from the International Monetary Fund (IMF) in 2021 were used to respond to the Covid-19 emergency and not abused, as alleged in some quarters.

He was responding to questions from participants during a stakeholders’ engagement meeting to unpack the Monetary Policy Statement (MPS) which he announced recently.

Dr Mushayavanhu also took the opportunity to explain more about the recently launched new structured currency, the Zimbabwe Gold (ZiG), which is backed by gold and other metals.

Asked why the RBZ had only US$100 million in its reserves when $322 million from SDRs was set aside as international reserves in 2021, Dr Mushayavanhu said the way the funds were utilised was properly documented and nothing was abused.

“I think the use of the entire $958 million SDRs is well documented. If you go to the Debt Office in the Ministry, they will tell you what went where,” he said.

“If you remember, this came about around the time we had Covid-19, and this is where some of the money went. If you want a detailed list, it is actually publicly available. I have had a look at it myself. From almost a billion in SDRs, there is a whole list of how it was utilised.”

Dr Mashayavanhu dismissed arguments that the diversion of funds that had been set aside as international reserves meant that the central bank was not independent, as it was done in reaction to an emergency.

“Sometimes, the whole thing about reserves is that if you have a granary full of grain, which you are using as a strategic reserve, and then there’s an emergency, it is perfectly in order to use it, as long as you have a plan to then rebuild your reserves,” he said.

In 2021, Zimbabwe received SDR677.4 million, equivalent to US$961 million at the time, from the International Monetary Fund.

It was part of the US$650 billion the global lender distributed to its members to provide additional liquidity for global economy, supplementing the foreign exchange reserves of member countries and reduce their reliance on more expensive domestic or external debt.

SDRs are reserve assets that the IMF issues, which are backed by US dollars, Euro, Yen, Sterling, and Yuan. – NewZiana