Sen. Chuck Grassley (R-Iowa) joined Sen. Bill Hagerty (R-Tenn.), Rep. French Hill (AR-02) and 38 additional members of the House and Senate in urging U.S. Treasury Secretary Janet Yellen to ensure International Monetary Fund (IMF) member countries are not facilitating any exchange of Russia’s Special Drawing Rights (SDRs). According to the IMF, member countries are able to exchange SDRs for hard currency – meaning Russia could use this loophole to bolster foreign currency reserves as the Ruble plummets.
“We cannot allow these reserve assets to help the regime withstand the latest sanctions announced by the President, let alone offer additional billions through further allocations. Moreover, the U.S. needs to work with allies on the IMF Board to plan for contingencies if Russia is forced to approach the Fund for lending. The IMF should not rescue a regime that poses such a threat to global economic stability,” the lawmakers wrote.
Since the U.S. is the largest shareholder of the IMF, Grassley and his colleagues conclude their letter by imploring Yellen to ensure the IMF is not used to support Putin’s unprovoked attack on Ukraine.
We write today to urge the Biden Administration to advocate, on behalf of the United States, at the International Monetary Fund that all member countries formally agree to not facilitate any exchange of Russia’s Special Drawing Rights (SDRs) and oppose any additional SDR allocation that bolsters Russian reserves.
The hostile invasion of Ukraine this week demonstrates why the IMF should have never approved its latest $650 billion general allocation of SDRs in August 2021. As Republicans have repeatedly raised, general SDR allocations are not targeted and have no conditions on what the SDRs can be used for.
The Biden Administration’s support for the IMF’s $650 billion general allocation, of which more than $17 billion went to Russia, ran counter to U.S. sanctions against Moscow even before the invasion of Ukraine. We cannot allow these reserve assets to help the regime withstand the latest sanctions announced by the President, let alone offer additional billions through further allocations. Moreover, the U.S. needs to work with allies on the IMF Board to plan for contingencies if Russia is forced to approach the Fund for lending. The IMF should not rescue a regime that poses such a threat to global economic stability.
As the largest shareholder of the IMF, the United States has a responsibility to ensure that the Fund is not misused to support Russia’s warmongering in Ukraine. We urge you to take all necessary measures to prevent this
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