TEHRAN – The International Monetary Fund (IMF) is able to provide Iran with its rightful financial assistance despite the U.S. efforts to sabotage the disbursement of the funds, Bloomberg reported on Sunday.
As reported, the U.S. which has a 16.51 percent vote share in IMF cannot veto the IMF board but it could use its sanction powers to sabotage the process.
The U.S. administration has been trying to prevent Iran from accessing its financial resources all around the world during the coronavirus crisis and the Islamic Republic has asked the IMF for a $5 billion loan which has also faced the U.S. opposition.
The European Union, however, has voiced its support for Iran’s request, calling on the Trump administration to ease its economic pressure on Iran at this time of crisis.
The report further argued that the IMF can take some measures in order to address both Iran and the U.S. concerns.
First, the Fund can account for the unease of U.S. regulators by excluding dollars, which are normally part of the Special Drawing Right (SDR) basket of currencies in which loans are made. Iran could even agree to accept the loan in euros alone, given that the EU is its primary supplier of medical goods.
Second, the loan could be paid into an account maintained in Europe by the Central Bank of Iran. This would mean that the funds are spent within the European financial system, and therefore subject to oversight from regulators who can monitor for potential misuse, in communication with American counterparts.
The Trump administration has itself implemented a similar system as part of the Swiss Humanitarian Trade Arrangement, a payment channel launched in February that enables the Central Bank of Iran to use assets in Switzerland towards payment of humanitarian exports by Swiss companies.
Administration officials know a loan to Iran can be “de-risked” but what they are actually seeking to avoid is a political defeat.
To that end, the IMF could seek a more discrete way to provide financial support: it could boost Iran’s access to liquid foreign-exchange assets by arranging the sale of some of Iran’s assets at the Fund to a third party, such as a European country.
In this scenario, the IMF would reallocate some portion of Iran’s 1.55 billion in SDR holdings (valued at approximately $2.1 billion) to the buyer, which would then make a payment to Iran in a foreign currency, such as euros, to an account maintained by Iran’s central bank outside the country. The funds would then be spent in accordance with the same oversight measures described above. Such a transaction would not require approval from the IMF board of governors, meaning the U.S. can avoid appearing isolated during an approval vote.
It can be done. The question now is whether the IMF has the will to do it.
Original News : https://www.tehrantimes.com/news/446682/IMF-can-give-Iran-financial-support-despite-U-S-pressures-Bloomberg