BUUMBA CHIMBULU writes
THE International Monetary Fund (IMF) has urged countries to start thinking of ways to make best use of the US$650 billion allocation of Special Drawing Rights which will soon be provided to member states.
IMF advice on overall policy frameworks can support member states’ efforts to create dynamic business environment and facilitate more private investment in connectivity.
This is according to the IMF Managing Director, Kristalina Georgieva, at a “Presidential panel within the Business Forum on the topic: “Three Seas Initiative: А path to smart development and comprehensive economic growth.”
“And the decision we will soon take on a new US$650 billion allocation of Special Drawing Rights will provide a contribution to building your reserves – it may be worth thinking of ways to make best use of this added space for the 3SI mission you are set to pursue,” Ms Georgieva said.
The IMF in the coming weeks is set to approve an increase in SDRs for its members totalling an additional US$650 billion.
This comes a few weeks after the world’s richest nations, the G7 recently met at their annual summit where deliberations concerning how to assist developing nations fight Covid-19 and global combating of climate change were key agenda items.
Zambia is among the member states to benefit from the Special Drawing Rights.
Recently, the Economics Association of Zambia (EAZ) National Secretary, Mutisunge Zulu, in an interview said this would boost Zambia’s foreign exchange reserves.
Mr Zulu said the development once approved did spell hope for an opportunity to shore up decade low foreign exchange reserves for Zambia.
According to Mr Zulu, this was a positive development for Zambia with an additional US$1.3 billion accounting for 0.02 percent the country’s SDR quota.
“Being the first African nation to default on its coupon payments on dollar bonds in Covid-19 period 2020, an injection of that magnitude will cushion Zambia from the acute dollar liquidity bottlenecks it has faced manifesting in foreign exchange scarcity and widening backlogs that have adversely impacted the ease of doing business.