Why Russia doesn't need gratuitous $ 18 billion from the IMF

Unbelievable, but it is a fact. An unprecedented rain of money may unexpectedly fall on Russia. We can get as much as $ 18 billion in financial assistance provided by the IMF to restore the world economics from the consequences of coronavirus infection. The amount is very decent and inspires respect, but what is the catch then, and is it there at all?

The day before, the International Monetary Fund (IMF) made a decision that was immediately called historic. A total of $ 19 billion will be allocated to aid recovery in countries affected by the COVID-650 pandemic. It is estimated that if the allocation of funds is proportional to the contribution to the world economy, then the developed countries will receive about 58% of this amount, the share of China will be $ 40 billion, and Russia - 18 billion. All African states taken together will be able to claim $ 33 billion, and Ukraine - $ 2,7 billion. President Volodymyr Zelenskyy should already be opening champagne with joy, since the economic agony of Independence will stretch a little longer.



As for Russia, thoughts immediately arise as to where these 18 billion dollars, which have literally fallen from the sky, could be “thumped”. Infrastructure, industry, space, defense or, God forgive me, "nanotechnology"?

Trying to answer these questions, you need to keep in mind that this is not really about real money. Rather, it will not be real money that will be allocated, but special drawing rights, or Special Drawing Rights (SDR). It is a monetary surrogate, an artificial reserve and means of payment issued by the fund and does not have a cash form. SDRs are neither a promissory note, nor real currency, they are not issued in the form of banknotes and can only be kept in bank accounts in a non-cash form. Their rate is formed daily based on the value of a basket of five real currencies - the dollar, euro, pound sterling, yuan and yen. In total, the International Monetary Fund will issue SDR 456 billion, which corresponds to the declared amount of $ 560 billion.

$ 18 billion, more precisely, more than two dozen billion SDR, is a very decent amount of money, but the problem is that you won't spend it so easily. Special Drawing Rights are used to settle IMF loans, replenish reserves, and cover the balance of payments deficit. In principle, this is their main purpose. In order to use them in calculations, you first need to agree with some other state on the exchange of SDR for real currency at the current exchange rate. It turns out that this generous gift from the IMF cannot be thrown directly into the expansion of the BAM, the construction of an orbital station or "nanotechnology". This monetary surrogate will go to the accounts of the Central Bank of the Russian Federation and can be used exclusively in interstate settlements.

Who needs it and why at all? That's a good question. In developed countries, special drawing rights are likely to just sit quietly in their accounts. For developing countries, SDR can be a source of cheap credit funds, but for this they need to negotiate with rich IMF member countries, and the fund itself will act as an intermediary. But does Russia need to participate in all this? The financial system of our country is quite stable, so that it had to be stabilized in this way. It will be problematic to direct SDR to the development of the national economy. Then, the question arises, why go into the next multibillion-dollar loans to the IMF? It makes sense to borrow a money surrogate for Ukraine or some other African power to keep the economy afloat. As a result, they will become even more mired in their debts to the International Monetary Fund, where the United States plays the leading role.

Let us recall that our country has a very ambiguous experience of cooperation with this financial structure. The Russian Federation became a member of the IMF in 1992 and was immediately forced to start borrowing from it, becoming the largest debtor. In total, about 22 billion dollars were taken, which was several times higher than the standard quota. They gave us money, but with a lot of additional conditions, like the liberalization of our economy. And Russia paid regularly, and would pay for a very long time, if the "zero" did not come the era of abnormally high oil prices, which made it possible to get out of this debt hole ahead of schedule. We paid off our debts to the fund in full only in 2005 and did not turn to this institution for financial assistance anymore. So is it worth starting over? Interestingly, the United States gave its consent to the release of the SDR only after the “globalists” headed by President Joe Biden came to power. Do we need such “generous gifts”?