BOLSTERING DOLLAR

…Govt to use part of $961m of IMF funding to prop up its currency

HARARE - Zimbabwe will use more than half of the $961 million allocated by the International Monetary Fund (IMF) in the form of special drawing rights (SDRs) to support its beleaguered currency.

The government abandoned a 1:1 peg between a precursor of the reintroduced Zimbabwe dollar and the greenback in February 2019. The currency now trades at 85.82 to the U.S. dollar and even lower on the black market, a plunge that’s made it difficult for the government to get it accepted locally, and it’s generally not tradable outside the country.

“For the support of the currency we want to hold back about $500 million,” Mthuli

Ncube, Zimbabwe’s Finance minister, said in an interview on Tuesday.The nation abandoned the Zimbabwe dollar in 2009 after inflation rose to 500 billion percent, according to the IMF, and legalised trade in a range of currencies including the U.S. dollar and South African rand.

The economy had tanked after a failed land-reform programme began in 2000 that saw the seizure of whiteowned commercial farms and the subsequent collapse of export earnings. Zimbabwe’s remaining SDRs will be used to support the acquisition of Covid-19 vaccines, investments in schools, hospitals and roads and other priorities, Ncube said.

Revolving funds will also be set up to help manufacturers and mining companies buy new equipment, and to revive the horticulture industry by encouraging the cultivation of roses, macadamia nuts and blueberries, he said.

The IMF injected a record $650 billion of reserve assets to build confidence and foster resilience and stability in the global economy in the wake of the devastation caused by the coronavirus pandemic. – BLOOMBERG NEWS.