US Treasury says it swapped dollars for $560 million of Ukraine’s IMF reserves in December

WASHINGTON, March 7 (Reuters) – The U.S. Treasury Department said on Monday it purchased about $560 million in special drawing rights reserves from Ukraine’s International Monetary Fund in December.

The SDRs, part of a $2.8 billion allocation Ukraine received last August, were swapped for US dollars, bolstering Kyiv’s finances, the Treasury said in a letter to members Congressional Republicans.

Lawmakers had criticized the IMF’s distribution of $650 billion in new SDR reserves in 2021 to all member countries and urged US Treasury Secretary Janet Yellen in a letter last week to block Russia’s access to its $17 billion allocation. Read more

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Assistant Treasury Secretary for Legislative Affairs John Davidson wrote in response that the harsh financial sanctions imposed on Russia by the United States and its allies have removed “significant obstacles” for Russia to benefit from its SDRs.

Countries supporting the sanctions represent the majority of counterparties available in SDR transactions, he said.

“This coalition will not undertake SDR transactions with Russia,” Davidson wrote. “Furthermore, even if the Central Bank of Russia were able to acquire key usable currencies – US dollars, euros, yen or pounds – as a result of a SDR transaction, further sanctions would effectively immobilize those assets, as well than Russia’s other foreign currencies.

Davidson said the Biden administration was working closely with U.S. allies to mobilize “significant international support for Ukraine, with the IMF and other international financial institutions playing a critical role in this effort.”

Later Monday, the World Bank’s board will consider an additional $460 million ($500 million) quick-disbursing loan to Ukraine, while the IMF said over the weekend that its board Board of Directors is reportedly considering a loan of $1.4 billion under the Rapid Financing Instrument for Ukraine as early as this week. Read more

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Additional reporting by Andrea Shalal; Editing by Chizu Nomiyama

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