Zimbabwe to Use Part of IMF Funding to Prop Up Currency

Zimbabwe will use more than half of the $961 million allocated by the International Monetary Fund in the form of special drawing rights to support its beleaguered currency, Bloomberg News reported. The government abandoned a 1:1 peg between a precursor of the reintroduced Zimbabwe dollar and the greenback in February 2019. The currency now trades at 85.82 to the U.S. dollar and even lower 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. “For the support of the currency we want to hold back about $500 million,” Mthuli Ncube, Zimbabwe’s finance minister, said in an interview on Tuesday. The southern African nation abandoned the Zimbabwe dollar in 2009 after inflation rose to 500 billion percent, according to the IMF, and legalized trade in a range of currencies including the U.S. dollar and South African rand. The economy had tanked after a failed land-reform program began in 2000 that saw the seizure of White-owned commercial farms and the subsequent collapse of export earnings. Read more.