Belarus to Get $1 Billion from IMF, Undermining U.S. Push
Belarus’s authoritarian regime, weighed down by sanctions imposed by the U.S. and European Union, is set to get an almost $1 billion lifeline from the International Monetary Fund.
That’s happening despite calls for the IMF to cut off President Alexander Lukashenko’s government following Western accusations of fraud in last year’s election and his brutal repression of protests that followed. President Joe Biden also met at the White House last month with exiled opposition leader Sviatlana Tsikhanouskaya, and the U.S. — the IMF’s largest shareholder — expanded sanctions this week to mark the one-year anniversary of the vote.
Belarus highlights how some authoritarian regimes opposed by the U.S. are set to benefit from the creation of a record $650 billion in special drawing rights, or SDRs, which are divided among IMF members roughly proportionally to the size of their economies.
IMF members are set to receive $650 billion in special drawing rights
“Getting IMF funds is like manna from heaven for Belarusian authorities,” said Dzmitry Kruk, a senior fellow at the Belarusian Economic Research and Outreach Center, a research group based in Minsk.
Lukashenko’s claim to have won a sixth term with 80% of the vote a year ago spurred the EU and U.S. to step up sanctions. Yet his government continues to have consensus recognition from fund members.
That’s effectively the only prerequisite for any of the IMF’s 190 nations to receive an injection of the IMF’s assets, approved earlier this month.
The U.S. supports the SDR issuance to help the world respond to the Covid-19 pandemic, and the nation will keep exploring options with allies to apply pressure on Lukashenko’s government, a State Department spokesperson said in an email.
On Belarus, “as is always the case, the IMF is guided by the international community, which continues to deal with the current government in the country,” fund spokesman Gerry Rice said Thursday in an emailed response to questions. “Given recent developments, we continue to monitor the situation closely.”
Some anti-democratic regimes criticized by the U.S., like Venezuela’s and Myanmar’s, will be cut off from the assets because the ruling governments don’t have broad recognition at the fund.
Belarus is more in the company of countries like China, Russia and Iran. China’s central bank is set to receive about $42 billion, Russia $18 billion and Iran about $5 billion in IMF assets despite criticism from the Biden administration and various sanctions.
That dynamic has made the SDR injection a lightning rod for criticism from some Republicans in Congress. Representative French Hill of Arkansas urged opposition to the issuance, calling it a “giveaway to wealthy countries and rogue regimes.”
Advocates of the reserves allocation lobbied for their issuance to help address the long‑term global need for funds and allow countries to dedicate resources to fighting the pandemic. Belarus’ share of the $650 billion is 0.14%, which corresponds to about $910 million. Countries are set to receive the reserves on Aug. 23.
Lukashenko’s opponents in recent months campaigned to prevent the government from getting the funds, fearing they may help keep his regime afloat and free up resources for more repression. Belarus’s neighbor Lithuania, a North Atlantic Treaty Organization member, accused Lukashenko of “hybrid aggression” against the EU by directing a flood of mainly Middle Eastern migrants across the border.
Lukashenko has ruled Belarus with an iron fist since 1994, shortly after the collapse of the Soviet Union. The nation is increasingly reeling from economic difficulties stemming from Covid-19 and exacerbated by political turbulence.
Tsikhanouskaya, during her visit to Washington last month, urged the U.S. to avoid any cooperation with the ruling regime in Belarus, including via the IMF.
Members of the U.S. House of Representatives, including Bill Keating, a Massachusetts Democrat, sent a letter to the U.S. envoy to the IMF board and to fund management requesting that the U.S. work with other IMF members to limit or condition the use of funds by Lukashenko’s regime.
But unlike Venezuela and Myanmar, no discussion has taken place among IMF members about rescinding recognition for Lukashenko’s regime, according to a person familiar with the fund’s operations, who asked not to be identified discussing internal deliberations.
Biden administration officials are instead trying to keep Belarus from using the IMF funds by exchanging the SDRs for usable currency, a person familiar with the Treasury’s plans said. Treasury officials earlier this year said the U.S. will refrain from offering currency to countries for which it applies sanctions, and will pressure allies to do the same.
Even if the U.S. declines to provide Belarus with hard currency, the IMF has 31 other nations and institutions who have entered into voluntary trading arrangements to provide cash in exchange for SDRs, including China.
In Belarus, the stability of the financial system is becoming increasingly precarious due to pandemic fallout and Western sanctions, Kruk said. The SDR allocation may help to reduce risks, free up resources to handle potential emergencies and give Belarus more flexibility in talks with Russia, a staunch ally that has become its lender of last resort.
— With assistance by Nick Wadhams