THE Ministry of Finance has announced that Zambia has received US$1.3 billion from the International Monetary Fund to boost foreign reserves under the Special Drawing Rights facility.
In a statement, the Ministry of Finance said that the US$1.3 billion would double 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,” read the statement.
The ministry stated that on Monday, 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 at which meeting Zambia was represented by Secretary to the Treasury Fredson Yamba, Bank of Zambia Governor Christopher Mvunga and other senior government officials.
Commenting on the development, Yamba reiterated 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.
The ministry further stated that the expenditure focus for the allocation would be on areas which would directly address health and economic impacts of the COVID-19 pandemic whilst elevated attention would also be directed towards helping to restore livelihoods of vulnerable Zambians and limiting the negative impact of the pandemic on the economy.
The decision of the Fund is set to become effective on 23rd August 2021.
Last week, the Board of Governors of the IMF approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion to boost global liquidity.
In a statement, IMF Managing Director Kristalina Georgieva said “This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis. The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”
The newly created special drawing rights will be credited to IMF member countries in proportion to their existing quotas in the fund.