The IMF has allocated more than $ 900 million to Belarus. What does it mean?

International Monetary Fund
3 mins

На русском языке: МВФ выделил Беларуси больше $900 млн. Что это значит?
На беларускай мове: МВФ вылучыў Беларусі больш за $900 млн

The publication RBK spread information that the IMF allocated more than $ 900 million to Belarus. Most likely this is true, but there is no information in English-language sources that the money was really allocated.

Moreover, the Belarusian authorities at this stage only received the right to use financial assistance from the IMF. But that doesn’t mean they’ll get it. Central banks that will make the transfer may simply refuse to make it. Why? We recall that US sanctions prohibit any financial transactions with individuals and legal entities under sanctions.

The IMF has allocated funds in the form of special drawing rights (SDR) and this is a fundamental difference. According to Katerina Bornukova, an expert at the BEROC Center for Economic Research, the main principle of using such rights is the ability for them to pay for external debt. They simply cannot be thrown into the domestic market.

What is the SDR that the IMF has allocated to 187 countries today?

This question was well answered by the experts of the analytical center NATO Atlantic Council, and we chose the main points for you.

SDR (Special Drawing Rights) are special drawing rights, a kind of IOUs that the IMF came up with in the 1960s to replenish the supply of easily exchangeable reserve assets.

SDR are distributed to countries not in equal shares, but according to the annual quota that each member state pays to the IMF. This quota is proportional to the country’s GDP, so most of the funds will be distributed among rich countries. Recipient countries can choose to exchange their SDR for one of their hard currencies: the US dollar, the euro, the Japanese yen, the Chinese yuan or the British pound. For example, today 1 SDR = $1,416.

There are 190 countries in the IMF, but only 187 participated in the distribution. The reason is that the legitimacy of the government of the 3 IMF member countries is disputed — so the funds were not allocated to them.

But in fact, the legitimacy of regimes in 5 countries, in addition to Afghanistan, Myanmar and Venezuela, to which the IMF did not allocate funds, is being challenged, the allocation of funds to the regime in Belarus and Iran was a big question.

It is difficult to say what guided the IMF in making the decision, however, in the case of Iran, the state may have problems with cashing out SDRs due to sanctions that limit their use.

It is very likely that such problems may arise for the regime in Belarus.

Read more here.

Previous post
Monologue. Working conditions at MTW and possible causes of death of a worker in the forging shop
Next post
«My vote was stolen here». This is how Knowledge Day was held in Belarus

Related Posts