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Govt undecided on M1billion IMF windfall

Kaleen Chikowore

THE government is yet to decide on how it will use about M1, 4 billion it received as part of its Special Drawing Rights (SDR) from the International Monetary Fund (IMF).

In a weekend interview with this publication, the Ministry of Finance’s Information Officer, Litemoso Motanyane, said there was no decision yet on how the SDR allocation will be used.

Lesotho received the SDR 66, 9 million allocation from the IMF on Monday along with several other IMF member states.

According to finance ministry sources, 1 SDR is equal to US$1, 419. This means that Lesotho received the equivalent of US$93, 6 million. This translates to about M1, 4 billion.

SDRs are an international reserve asset create by the IMF and given to members countries to supplement their official reserves. They are given to countries on the basis of each country’s shareholding in the IMF.

They can also be used to provide countries with liquidity.

The IMF began disbursing the SDRs on Monday. IMF Managing Director, Kristalina Georgieva, said, “the largest allocation of Special Drawing Rights (SDRs) in history—about US$650 billion—comes into effect today (Monday)”.

“The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis. The SDR allocation will provide additional liquidity to the global economic system — supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the Covid crisis.

“SDRs are a precious resource and the decision on how best to use them rests with our member countries. For SDRs to be deployed for the maximum benefit of member countries and the global economy, those decisions should be prudent and well-informed,” Ms Georgieva said.

Finance Minister Thabo Sophonea on Wednesday confirmed that Lesotho had received its share of the SDRs.

He would not be drawn into saying how the country would use the SDRs.

Lesotho could take a leaf from other African countries that have indicated that they will spend the SDRs on fighting the Covid-19 pandemic and supporting their health sectors, manufacturing industry as well as social development initiatives.

The country needs to deploy more resources to fight Covid-19, something which is viewed as necessary for the full resumption of economic activities. So far, Lesotho’s interventions, including the procurement of vaccines, have largely been international donor or private sector funded.

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