Yellen Urged by Republicans to Block Taliban From IMF Reserves

Yellen Urged by Republicans to Block Taliban From IMF Reserves
By Eric Martin

U.S. Treasury Secretary Janet Yellen should intervene at the International Monetary Fund to prevent Taliban-led Afghanistan from being able to use almost $500 million in reserves, Republican House members said.

The group of 18 lawmakers, including Arkansas’s French Hill, wrote to Yellen on Tuesday in a letter obtained by Bloomberg News, asking Yellen to take action at the fund and respond to their request by Thursday afternoon. They also called on Yellen to provide more detail on measures being taken at the IMF to make sure the assets, known as special drawing rights, aren’t used in ways that run counter to U.S. national interest.

IMF members approved the creation of a record $650 billion in global reserves this month to help emerging and low-income nations deal with mounting debt and Covid-19. By fund rules, the assets are divided among IMF members roughly proportionally to the size of their economies, which for Afghanistan is 0.07% of the total, or $455 million. 

The SDRs are scheduled to be transferred to central banks around the world on Aug. 23.

While the U.S. can’t unilaterally change the recognition of a country within the international community, the nation is the IMF’s biggest shareholder, and its views often carry outsize influence within the fund.

Fund watchers are following global reactions to the Taliban’s arrival, because consensus recognition by the international community is effectively the only prerequisite for an IMF member to get access to the assets. Venezuela and Myanmar are among nations that will be unable to tap them based on a lack of recognition as measured through a survey of the IMF’s members.

Hill has steadfastly opposed the creation of the new reserves over the past year, warning that the plan isn’t targeted to countries in need and will send funds to U.S. adversaries including China, Russia, Iran and Syria.

Reserved Infusion:

IMF members are set to receive $650 billion in special drawing rights

Treasury should “affirm to the Congress that they will work to see that a Taliban Afghanistan does not have international recognition and cannot access the SDRs,” Hill said in a phone interview.

In the letter, lawmakers said “billions of dollars from the next SDR allocation will go into the hands of bad actors including state sponsors of terror” and “oppressive regimes. After the events in Afghanistan of the past two weeks and the fall of the Afghan government on Sunday, the Taliban has been added to the list of rogue regimes.”

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