Finance and Economic Development Minister Mthuli Ncube said the government will use more than half of the $961 million allocated by the International Monetary Fund in the form of special drawing rights to support the Zimbabwe dollar.
Speaking to Bloomberg on Tuesday, the same day he (Ncube) and Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya confirmed the almost US$1 billion allocation from the Bretton Woods institution, Ncube said:
For the support of the currency, we want to hold back about $500 million.
Zimbabwe abandoned a 1:1 peg between the RTGS dollar, a precursor of the reintroduced Zimbabwe dollar, and the greenback in February 2019.
The currency now trades at 85.82 to the United States dollar and as high as 150 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.
Zimbabwe abandoned its currency in 2009 after inflation rose to 500 billion per cent, according to the IMF, and legalised trade in a range of currencies including the US dollar and South African rand.
Ncube said the country’s remaining SDRS will be used to support the acquisition of COVID-19 vaccines, investments in schools, hospitals and roads and other priorities.
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, Ncube added.