Central Bank of Iran Asks IMF to Uphold Its Mandate

EghtesadOnline: The CBI's governor says Iran is determined to use its legal right for receiving a loan from the International Monetary Fund to fight the coronavirus pandemic.

News ID: ۷۴۹۸۲۷

11 April 2020

Abdolnasser Hemmati said Thursday that he had sent a second letter to the IMF chief to pursue Iran’s earlier request to the crisis lender, Financial Tribune reported.

Earlier in March the Central Bank of Iran requested $5 billion in emergency loans from the fund to help the country contain the spreading virus and mitigate its dangerous economic impact.

The IMF so far has made no official statement on the Iranian request.

In a note on his social media account, Hemmati said the CBI has sent the request in a follow-up to a statement by IMF Managing Director Kristalina Georgieva that the fund will offer $50 billion in emergency loans to countries grappling with the pandemic.

“We are determined to seriously pursue our request within IMF’s Rapid Financing Instrument… and we expect the fund to respond positively to Iran’s request”, Hemmati wrote, recalling that Iran was one of the cofounders of the IMF.

The senior banker, however, pointed to the strange and visible obstructionism by some foreign powers to distort Tehran’s lawful efforts to use the funds.

He was referring to the apparent opposition by the United States administration to the loan request on the ground that Iran has sufficient funds at its disposal and should use its own money to lift its economy weakened under years of heavy sanctions and other ills.

President Hassan Rouhani said Thursday that under the difficult economic conditions, the IMF needs to fulfill its mandate without being influenced by, or under pressure of governments hostile to Iran.

Iran has been hit the hardest hit by the novel coronavirus in the Middle East. The number of new coronavirus cases reached 68,192 cases on Friday and the death toll rose to 4,232 since the viral outbreak in mid-February in Iran, according to the Health Ministry spokesman Kianoush Jahanpour, IRNA reported.

Fears over the spread of the  infectious disease have given rise to pain and panic and  shuttered many businesses, forced others to work below capacity, order staff to work from home or furlough workers. People in most cities and towns prefer to stay at home following persistent calls for social distancing by the government and senior health officials.

While nearly all countries are members of the IMF and have voting powers, the US is the largest shareholder and has an effective veto over decisions.

Potential of 2 Trade Channels

In response to claims by some unidentified US officials that Tehran could use the IMF money for purposes other than combating the deadly infectious disease known as COVID-19, Hemmati pointed to two trade channels already in place to use the IMF assistance.

It must be stressed that “INSTEX and the Swiss cannel [SHTA], which the Americans claim are exempt from unilateral US sanctions, are two available channels for trading some humanitarian goods, including [using] the funds that IMF will grant to Iran,” he noted.

Both INSTEX (Instrument in Support of Trade Exchanges) and SHTA (Swiss Humanitarian Trade Agreement) are trade channels designed to facilitate exchange of humanitarian goods without tripping over unilateral US penalties.

The former is backed by France, Germany and the UK, the three countries party to the landmark nuclear deal, and the latter is an initiative by the Swiss government.

The CBI boss expressed the hope that the US opposition would not undermine “the professional image of the IMF and its mandate to aid member countries during this historical period” and global health crisis of epic proportions.

US-Iran ties took a turn for the worst after Donald Trump in 2018 withdrew from the nuclear deal that Iran signed with world powers and imposed new economic sanctions.

The embattled US president and his senior aides have vowed to continue with their hostile “maximum pressure” policy against Iran until it comes to the negotiating table for a new and comprehensive deal.

Unilateral and illegal US measures targeting everything from oil sales to shipping and financial activities have deterred several foreign banks from doing business with Iran - including humanitarian deals.