Time for IMF to Act Now

EghtesadOnline: Iran’s central bank governor has again called on the International Monetary Fund to resist US pressure and approve its application for financing to help bridge a 10 billion-euro ($10.9 billion) deficit as the country’s sanctions-hit economy struggles to cope with the coronavirus pandemic.

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21 April 2020

Iran asked the IMF on March 6 for $5 billion in loans to help finance its efforts to combat the disease and support an economy hit by US sanctions that have devastated oil revenues, according to Financial Tribune.

While the US has said it will block the application, on April 15 the IMF’s director for the Middle East and Central Asia said it’s proceeding with Iran’s request for assistance.

“The last time I checked, it’s not the United States running the IMF, but its management and the board of governors who oversee the work and ensure that the IMF delivers on its mandate,” Abdolnaser Hemmati, head of the Central Bank of Iran, said in written answers to questions sent by Bloomberg.

Iran is the site of the worst coronavirus outbreak in the Middle East with more than 5,000 deaths and over 80,000 infections. The country started easing restrictions on some businesses on April 11, seeking to boost the economy, and two-thirds of government employees have now been allowed to return to work.

‘Time to Act Is Now’

“We have lost so many lives, as the Americans and Europeans have lost, and my thoughts and prayers go with them,” Hemmati said, appealing directly to Kristalina Georgieva, chair and managing director of the IMF. “The time to act is now.”

According to Hemmati, US restrictions and its decision to add the Iranian central bank to its list of “specially designated nationals and blocked persons” in September 2019 prevent Iran from accessing its own money, which would be “more than enough” to cover the 10 billion-euro shortfall.

“Central bank reserves are under US sanctions overseas, which is illegal and unilateral, and I want to be clear about this. What we are saying is that the sanctions should be lifted altogether, however, sadly, there are actors in the US government that have little regard for international law and order,” Hemmati said.

Iran is separately seeking a $50 million loan from the World Bank, marking the first time since 2005 that the country has applied for such a loan from the Washington-based institution, a deputy health minister said on state TV on Saturday. It has also asked for a 130 million-euro loan from the Jeddah-based Islamic Development Bank.

Hemmati said he has told the IMF that a loan could be channeled directly into the EU’s INSTEX trade vehicle and the SHTA, a financial channel run by the Swiss government to allow Swiss-based food and pharmaceutical companies to send goods to Iran.

“These are specifically designed to help us import food and medicine,” Hemmati said. “These channels have proper safeguarding mechanisms in place to address all concerns, if any.”

Hemmati said Iran had requested 100% of its quota in the IMF, equivalent to 3.6 billion Standard Drawing Rights.