Finance Minister Tendai Biti, under police investigation as to how the controversial $500-million Zimbabwe received from the International Monetary Fund (IMF) in 2009 was used, says the funds were spent on infrastructure projects and alleviating the chronic liquidity crisis in the financial market.

Biti said part of the money was specifically used to fund infrastructure projects, lines of credit, boosting the Reserve Bank of Zimbabwe (RBZ)'s lender of the last resort position, agriculture and clearing debts.

Zimbabwe got a Special Drawing Rights (SDR) allocation of 324.4-million, an equivalent of $512.3-million in 2009, after the IMF injected $283-billion into the global economy to provide liquidity and boost member countries' dwindling foreign exchange reserves at the height of the financial crisis.

In a bid to fend off secret police investigations into the case, Biti said the money was put to good use.

"The balance in Zimbabwe's general SDR allocation account at the IMF, net of the $142.1-million owed to the IMF's poverty reduction and growth fund facility account, currently stands at $212-million," he said.

"This balance is after Zimbabwe's drawdown of $50-million in December 2009 and a further $100-million in February 2010 in support of various infrastructure projects."

The minister said he allocated the money to refurbish Zimbabwe's dilapidated infrastructure. "To augment resources allocated in the 2012 budget, treasury is withdrawing resources amounting to $110-million from Zimbabwe's general SDR allocation account at the IMF in support of the following: infrastructure, lines of credit, lender of last resort and agriculture," he said.

Biti said he used $40-million to finance priority infrastructure projects which could not be accommodated in the 2012 budget. About $30-million was used for lines of credit for the productive sectors of the economy currently operating at low capacity. This is part of government's contribution under the Distressed and Marginalised Areas Fund, to which Old Mutual has already contributed $20-million.

At least $20-million was directed towards the $100-million announced in the 2012 budget to augment $7-million already made available to the RBZ for its lender of last resort mandate. Another $20-million was moved to support agriculture, the backbone of Zimbabwe's economy, ruined by state-sponsored land invasions which started in 2000.

Police are probing Biti over how the IMF money was used with an intention to arrest him if they find traces of fraud.

The probe of Biti follows another recent attempt by police last year to arrest Prime Minister Morgan Tsvangirai and his nephew Hebson Makuvise, Zimbabwe's ambassador to Germany, over an alleged $1.5-million fraud case.

It was alleged Tsvangirai had double-dipped into state funds by securing first $1.5-million and then $1-million later to buy an upmarket house in Harare.