Days before coup, IMF sent Myanmar $350 million in emergency aid; no precedent for refund

[webfact]

Days before coup, IMF sent Myanmar $350 million in emergency aid; no precedent for refund

By David Lawder

 

Myanmar's military checkpoint is seen on the way to the congress compound in Naypyitaw, Myanmar, February 1, 2021. Picture taken

 

WASHINGTON (Reuters) - The International Monetary Fund last week sent $350 million in cash to the Myanmar government, part of a no-strings-attached emergency aid package to help the country battle the coronavirus pandemic.

 

Days later, military leaders seized power and detained elected leader Aung San Suu Kyi and other elected officials, in what the U.S. State Department said on Tuesday constituted a coup.There appears to be little the IMF can do to claw back the funds, part of rapid-disbursing COVID-19 financing programs with almost no conditions and approved by the IMF board on Jan. 13, sources familiar with the payments and international finance experts said.

 

"We are following the unfolding developments closely. We are deeply concerned about the impact of events on the economy and on the people of Myanmar," an IMF spokesperson said in a statement emailed to Reuters on Tuesday, confirming the payment was completed last week.

 

U.S. President Joe Biden, facing his first international crisis since taking office less than two weeks ago, has threatened new sanctions against the generals, and the State Department said it would review its foreign assistance to the southeast Asian country.

 

The United States is the dominant shareholder in the IMF, which has provided Myanmar with $700 million in emergency coronavirus financing over the past seven months, including last week's payment, which included $116.6 million through the IMF's Rapid Credit Facility and $233.4 million through the Rapid Financing Instrument.

 

The Fund said in a statement https://www.imf.org/en/News/Articles/2021/01/13/pr219-myanmar-imf-execboardapproves-sdr258-4m-disburse-under-rcf-purchase-rfi-address-covid19 on Jan. 13 the money would help Myanmar meet "urgent balance-of-payments needs arising from the COVID-19 pandemic, especially the government’s recovery measures to ensure macroeconomic and financial stability while supporting affected sectors and vulnerable groups."

 

Unlike the IMF's regular financing programs, which disburse funds in smaller increments as performance benchmarks are met for agreed policy reforms, coronavirus emergency aid has been sent quickly, often all at once.

 

"It's not a program that was negotiated, there isn't conditionality and there aren't forward-looking reviews with disbursements tied to those reviews," said Stephanie Segal, a former IMF economist and U.S. Treasury official now with the Center for Strategic and International Studies in Washington.

 

"I'm not aware of any precedent where money that's been approved by the IMF board can be recalled," Segal added.

 

Since the beginning of the COVID-19 crisis last year, the IMF has provided emergency financing to 80 countries.

 

The timing of the latest disbursement to Myanmar was unfortunate, two sources familiar with the payments said, and pointed to the risks of using rapid financing that gives governments broad discretion over how they spend the money.

 

The best-case scenario is that the Myanmar government that emerges from the current political turmoil will spend the money appropriately because it wants to have a productive relationship with the Fund, one of the sources said.

 

The IMF's counterparty in Myanmar is the Central Bank of Myanmar, and the source expressed hope it can maintain its independence from the country's finance ministry.

 

But on Tuesday, the ruling Myanmar military appointed Than Nyein as the country's new central bank governor, reinstating him to a post he previously held between 2007-2013, during the rule of the last junta.

 

The World Bank, which has provided more than $150 million in financing to Myanmar since the pandemic started a year ago, said on Monday it was gravely concerned about the military takeover, warning it risked a major setback to the country’s transition and its development prospects.

 

(Additional reporting by Andrea Shalal; Editing by Heather Timmons, Sonya Hepinstall and Lincoln Feast.)

 

-- © Copyright Reuters 2021-02-04

 

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[Andy from Kent]

I don't have the impression Thailand wants to do or say anything that could possible annoy the generals in

Myanmar.

 

This Australian  60 Minute piece presents the situation well.      The reporter almost brings out comedy @ 12:34.

 

I'm impressed with Aung San Suu Kyi.

 

 

 

 

[ezzra]

Burma or Myanmar is pretty much a Micky mouse country where today you rule and tomorrow you're in prison facing a firing squad, even N. Korea is a more stable country than this sheet-hole...and to sent all that cash on a whim of a wing and a prayer. good luck to you getting it back now...

[RJRS1301]

I find it inconceivable that the funds were cash. Has the IMF not heard of electronic transfer,?

 

I am disgusted that Australia is going ahead with an arms sale to the army there. Lobbied by former MP Chistopher (not ethics) Pyne

[sammieuk1]

Some generals will be watching on how to coup a coup and get a massive extra wedge for sure ???? 

[PatOngo]

1 hour ago, webfact said:

The International Monetary Fund last week sent $350 million in cash to the Myanmar government, part of a no-strings-attached emergency aid package to help the country battle the coronavirus pandemic.

 

Days later, military leaders seized power

 

Perfect timing by the generals, Yee Haw! The trough is overflowing!.............And it's cash!!!

[asiasurfer]

Nice amount of cash shot into the winds. Will get them some new Mercedes and BMW cars I guess... ????

[TKDfella]

Very sad. Myanmar is one messed up country and the people are suffering. I doubt the money from the IMF will ever be returned or that the people will see any part of it.

[Pique Dard]

6 hours ago, webfact said:

Days before coup, IMF sent Myanmar $350 million in emergency aid; no precedent for refund

some military must wonder why IMF did not send them money just before they seized power? 

[Enzian]

Our US tax dollars at work (or just more debt to drive down the dollar index further). Also, with this cushion, the kind of sanctions normally available to Washington won't hurt the generals, as usual it will only be the regular people who feel any pain.

[CrunchWrapSupreme]

I recall an article a few months back, about some Thai sex workers who had been working in a Myanmar hotel, then came back and brought Covid along with them. I specifically remember a quote about their customers, “some fat military generals from Yangon”. Hah. Their bellies and habits are well funded.

[KannikaP]

How stupid to pay cash. If they'd used a Credit Card they could invoke Section 75 to get it back !    LOL

[Dagfinnur Traustason]

Another US F-UP

[Mike Rodik]

nice, they got the free money

 

the drug trade is still alive

 

 

[Moonlover]

16 hours ago, RJRS1301 said:

I find it inconceivable that the funds were cash. Has the IMF not heard of electronic transfer,?

 

If a country does not have sufficient 'foreign currency reserves' it becomes very difficult for it trade on the international markets. Numbers on a computer screen are no substitute for cash or gold in the nations coffers.

 

Egypt got itself into a serious problem during the Arab spring and quite simply run out of money to pay for important imports like oil and wheat. Initially Egypt would not agree to the IMF's terms for loans so Saudi Arabia came to their rescue with plane loads of dollars to bail them out.

 

On the international stage cash or gold are still must have commodities.

[onebir]

23 hours ago, webfact said:

The International Monetary Fund last week sent $350 million in cash to the Myanmar government, part of a no-strings-attached emergency aid package to help the country battle the coronavirus pandemic.

Got to wonder if the coup wasn't specifically launched to allow a clique to misappropriate this. (If so, it'd be a rare case of the IMF screwing a country by not imposing conditionality...)

[Scott]

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