Africa requires about US$285 billion through 2025 in order to fully recover from the Covid-19 pandemic whereas roughly US$520 billion is needed for the African nations to catch up with the advanced economies. The momentous allocation of US$650 billion in Special Drawing Rights (SDRs) by the IMF in August 2021 offered a critical and sizable new source of financing as this would provide a much-needed injection of liquidity, without adding to debt burdens that are already crippling a large number of economies in the Global South. Despite this, due to the allocations being done according to a country’s IMF quota, Africa received only 5% of the allocation totaling to about US$33 billion in SDRs.
The Zambian Scenario….
The treasury reiterated the 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 expenditure focus for the allocation will be on addressing the health and economic impacts of the Covid-19 pandemic with a keen attention to helping restore livelihoods of vulnerable Zambians and limiting the negative impacts of the pandemic on the economy.
What an increase in allocation would mean…
An increase in allocation will further elevate the level of foreign exchange reserves and aid in building the confidence needed to expedite recovery. The IMF resources will additionally assist the country to attain the aspirations of the Economic Recovery Programme and lead to economic stabilization and positive growth in the post-pandemic recovery period especially in regards to social protection.