Zimbabwe is having to bolster its $4 billion 2012 budget with $110 million from an 2009 emergency IMF fund, a measure of the extent of an acute foreign exchange shortage in the southern African nation. Finance Minister Tendai Biti, who has previously opposed using money from the $500 million IMF emergency facility, said "liquidity challenges and the need to address our infrastructure deficit" now outweighed the need not to take on more debt.
In all, Harare owes multilateral lenders including the IMF and World Bank about $7 billion and is in arrears on its repayments, precluding it from accessing any credit beyond the special financial crisis fund. The money would be used for infrastructure, credit lines for manufacturing and support for agriculture, he told reporters. So far, the government had used $150 million of the funds for agriculture and infrastructure projects, and $142 million to pay off a debt to the IMF's Poverty Reduction and Growth Fund (PGRF), he added.
Biti also said Zimbabwe was unlikely to meet a target of 1.8 million tonnes of maize in its 2011-2012 harvest due to late rains, but insisted the nation of 13 million people would not need significant imports. "Given the late rains, we will not be able to meet the targeted 1.8 million tonnes, but we've not lost more than 10 percent of that," he said. "Zimbabwe will still be able to feed itself. We still have our 500,000 tonnes in the strategic grain reserves." The government would be able to maintain its inflation target of 5 percent or less throughout 2012 despite concerns over food supply, he added.
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