Sunday Mail: IMF’s Special Drawing Rights can transform Zimbabwe
The anticipated International Monetary Fund (IMF) Special Drawing Rights (SDR) allocation have capacity to transform the Zimbabwean economy and offset the adverse impacts of Covid-19, experts have said.
The experts’ comments come after the Minister of Finance and Economic Development, Professor Mthuli Ncube, indicated that Treasury will deploy its share of close to US$1 billion equivalent of SDRs to support economic recovery and key social programmes for vulnerable groups.
”We will use what it is targeted for. We expect the IMF to issue a guidance note in terms of the usage of SDRs. It’s really to support economic recovery and social sectors.
“We will do the same and support health, education, vaccine acquisition and social protection programmes, but also we need to invest the money in future growth so that it supports the real economy,” said Minister Mthuli recently in Parliament.
“So we want to invest in positive rate of return projects and sectors to support the economy, and finally we will have to use a portion to stabilise our currency and build our reserves.”
SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves and provide liquidity when experiencing balance of payment challenges.
The IMF has indicated a US$650 billion SDR that will be released this August as one of the measures to limit economic pressure caused by the Covid-19 pandemic especially in developing countries.
Of the amount, Zimbabwe is expected to receive around US$1 billion and experts say this is a welcome development at a time the economy is constrained due to the negative effects of Covid-19 pandemic.
The analysts said prudent utilisation and prioritisation of such funds remain key to achieve economic turnaround. For instance, key productive sectors of the economy and infrastructure development should be given priority in the allocation of the SDRs.
“SDRs are a welcome finance mechanism for Zimbabwe and the rest of Africa, they are not conditional, a country can utilise the funds as according to their own blueprints,” said Public Policy and Research Institute of Zimbabwe’s Dr Gorden Moyo during a Zimbabwe Coalition on Debt and Development (ZIMCODD) virtual discussion on the IMF SDRs implications to Zimbabwe.
Dr Moyo said the Covid-19 pandemic worsened economies in developing countries that were already in distress. As such, the IMF financial facility comes at an opportune time, and prudent utilisation of such can transform the economy, which is expected to develop into an upper middle income economy by 2030.
“We have had this SDRs before, in 2009 when the economy was struggling and it helped keep the economy running. It is the kind of money that if strategically used it can change the economic landscape of Zimbabwe.
“It has also come at a time the country faces health care challenges and impacts of climate change so if properly used we can change lives,” said Dr Moyo adding the SDR should also be deployed towards infrastructure development which is a key economic enabler.
Professor Tapiwa Mashakada said apart from productive sectors, authorities should also strengthen social protection nets at a time Covid-19 has caused disruptions to economic activity.
He said: “People have lost jobs due to the pandemic and are struggling. This SDR should help countries recover from effects of the pandemic. As a country let us also not squander all of it but use it prudently bearing in mind future uncertainties.”
Civil society organisations have also called on transparency in the utilisation of the funds with stakeholders such as the media holding authorities to account while Parliament plays an oversight role. African Forum and Network on Debt and Development (AFRODAD) senior policy analyst Tirivangani Mutazu, said there is need for stakeholder engagement to agree on the priority sectors that should benefit from the SDRs.
“SDRs provide relief for countries and the IMF has stepped in to help lower income economies at a time the pandemic has worsened the situation.
“However, transparency and accountability remains key in the deployment of the funds. There should be debates on utilisation, for instance should it be used to pay part of our debt arrears, will it be used towards the devolution initiative. If deposited into the fiscas, are we likely to see a supplementary budget for 2021 or it will be for 2022. All these issues need to be discussed openly to enhance transparency and accountability with Parliament playing an oversight role,” he said.
Mr Mutazu added the SDRs remain an underutilised financing tool and ideal for developing economies as they are not loans with conditionalities and therefore do not affect the sustainability of member countries’ public debt.
US removes tariff threats against Việt Nam
The headquarters of the State Bank of Việt Nam. The Office of the US Trade Representative will not take any tariff action against Việt Nam. — VNA/VNS Photo Trần Việt
WASHINGTON — The Office of the US Trade Representative (USTR) on Friday issued a formal determination in the Việt Nam Currency Section 301 investigation, under which the agency will not take any tariff action against Việt Nam.
A statement by the USTR said the move reflects the agreement reached earlier this week between the US Department of the Treasury and the State Bank of Việt Nam (SBV).
The determination finds that the agreement between the US Department of the Treasury and SBV provides a satisfactory resolution of the matter subject to investigation and that no trade action is warranted at this time. The USTR, in co-ordination with the US Department of the Treasury, will monitor Việt Nam’s implementation going forward, it said.
US Trade Representative Katherine Tai commended Việt Nam for its commitment to addressing the US’s concerns with its currency practices and setting an important example for the Indo-Pacific region.
American workers and businesses are stronger when their partners value their currency fairly and compete on a level playing field, she said, adding that in coordination with the US Department of the Treasury, the US will work with Việt Nam to ensure implementation, and will continue to examine the currency practices of other major trading partners.
Earlier this week, the US Department of the Treasury and SBV reached an agreement to address the US’s concerns about Việt Nam’s currency practices.
A joint statement by the US Department of the Treasury and SBV said that SBV Governor Nguyễn Thị Hồng and US Secretary of the Treasury Janet L. Yellen held a virtual meeting to discuss the issue.
The US Department of the Treasury and SBV have had constructive discussions in recent months through the enhanced engagement process, and reached an agreement to address the US Department of the Treasury’s concerns about Việt Nam’s currency practices as described in the US Department of the Treasury’s Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.
Việt Nam confirmed that it is bound under the Articles of Agreement of the International Monetary Fund (IMF) to avoid manipulating its exchange rate in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese đồng.
SBV is also making ongoing efforts to further modernise and make more transparent its monetary policy and exchange rate framework.
SBV will continue to provide necessary information for the US Department of the Treasury to conduct thorough analysis and reporting on SBV’s activities in the foreign exchange market in the US Department of the Treasury’s Semiannual Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US. — VNS
Al-Zubaidi calls for benefiting from oil revenues, outlets and high taxes to raise the value of the local currency
The independent candidate, Thaer Munir Al-Zubaidi, demanded to take advantage of oil revenues, outlets and high taxes to raise the value of the local currency.
He said in a press statement that: The large revenues from the rise in oil prices, border crossings, taxes and others require the government and its concerned parties to consider the value of the local currency and work to raise it against other foreign currencies.
Al-Zubaidi added that: what the local market witnessed of a great increase in commodities, especially basic ones, which was the result of the devaluation of the local currency, had a clear impact on the livelihood of citizens, especially those with limited income, whose suffering increased.
He stressed the importance of making the most of the increase in revenues to end the deficit and raise the value of the local currency, which lifts the financial and economic reality from its current conditions to a new reality that serves the people of the country in general. link
The appearance of Mohammed Saleh: The improvement in revenues .. will strengthen the local currency and bring about structural changes in the growth of the national economy
Adviser to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, confirmed that: The improvement in revenues will strengthen the local currency and bring about structural changes in the growth of the national economy.
He told the National Iraqi News Agency ( NINA ) that: the continuous improvement in the revenues of the federal general budget will, at the same time, provide sustainability for the data of that budget, leading to structural changes in the growth of the national economy.
Saleh added that: this improvement will be a continuous and positive thing in the non-oil GDP and achieve a higher level of economic stability in general.
It is noteworthy that international oil prices, especially the price of Basra oil, witnessed a remarkable improvement during the last period, exceeding 70 dollars, which will lead to closing the budget deficit and raising the level of the economic and financial sector in the country. link
Happy new month of August. The “end of the month” came and went, the same as all the priors. August is known for many things, including the dog days of summer, National Watermelon Day (Aug 3), and National Smile Week (Aug 5-7). Here are more August fun facts: https://cayman.loopnews.com/content/10-fun-facts-about-august
wish this RV would just happen. Its way past due
August is here now what??
The release to us dallred. Why did everyone think as Iraq changes the rate in their country that we would be going to the bank at the same time?
Wait did they change the rate in Iraq?
That is what we are waiting to hear. Once they do, our banks will follow suit with us rushing to the banks…..A lot of chatter based on all they’ve done the past 6 weeks. Recently, since the PM arrived home, they back paid the farmers to 2019. Very similar to the retirees in June, Kurdistan two weeks ago, and the people have had the increases on their cards limited for certain transactions
ANTARA News: Bank Indonesia monetary policy in 2022 to focus on stability (8/1/21)
Source: Dinar Recaps
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