Russia will not use the right to receive a preferential loan from the International Monetary Fund, Prime Minister Vladimir Putin said at a recent session of the government. Russia could receive $8.840 billion from the IMF. Moreover, Russia intends to say no to investments in the Special Drawing Rights program (SDR), which were originally intended to be used for the creation of a new world currency, an alternative to the US dollar.
“Let’s agree to the following. We will not be using those resources [from the IMF], nor do we have any plans to be a donor state,” Putin said at the government Thursday, Interfax reports.
Russia ’s Finance Minister Aleksey Kudrin stated during the meeting that Russia could count on a preferential loan from the IMF within the scope of the SDR program - $8.840 billion.
SDRs are used as an accounting unit with other international organizations. The cost of SDRs is based on the basket of world’s four major currencies: the US dollar, the Euro, the British pound and the Japanese yen. SDRs virtually represent records on accounts of shareholders at the IMF. The countries can receive currency assets from the fund (free of charge, in case of necessity) – an equivalent to the volume of SDRs on their accounts.
Russia has a right to use 4.407 billion SDRs, which is equal to $6.870 billion. Additionally, Russia receives 1.26 billion SDR ($1.970 billion) from the countries that became IMF’s shareholders after 1981.
“This is our reserve in case of a crisis, or a different situation, in which we would have to attract a loan to preserve stability of the Russian payment balance,” Finance Minister Kudrin said.
“For the time being, Russia covers its current imbalance of treasury with the help of the Reserve Fund. Probably, Russia will resort to its share at the IMF in the future, in case of a serious budget deficit. There is no such need at the moment. As for Putin’s refusal to act as a donor state, the situation here is clear. Russia cannot be a sponsor of other countries taking into consideration the nation’s budget deficit of nine percent. Governmental officials say that Russia’s Reserve Fund will be emptied by the end of 2010,” Andrey Gangan, a senior analyst with Kalita Finance Group said in an interview with the Vzglyad newspaper.
Putin’s decision to decline foreign investments means that the current situation in Russia is stable enough. Aleksey Kudrin said that Russia was not in a critical situation to attract IMF’s loans.
“Russia does not have such a situation. We do not think that there is a need for us to use those resources,” the minister repeated.