IMF says members to guide decision on whether to recognise Myanmar’s military leaders

The International Monetary Fund will be “guided by our membership” in deciding whether to recognise the military regime that has seized power in Myanmar as the country’s legitimate government, IMF spokesperson Gerry Rice said on Thursday.

The Fund is watching the situation in Myanmar closely and is “very concerned about the impact of recent events” on Myanmar’s people, Rice told a regular IMF news briefing.

Reuters first reported that the IMF had transferred about $350 million in emergency coronavirus financing to Myanmar last week, just days before the coup.

Rice said the IMF board followed all proper procedures in approving the payment to Myanmar. The agreement with detained leader Aung San Suu Kyi’s government included safeguards aimed at ensuring that the funds would be used for coronavirus-related humanitarian purposes, including audit requirements and transparency for procurement contracts.

“It would be in the interests of the government, and certainly the people of Myanmar that those funds are indeed used accordingly.”

It will be up to the IMF’s 190 member states to decide whether to recognize the military regime that seized power last Saturday, Rice said.

“As in other cases, we are guided by the international community, guided by the membership in terms of recognition of the government. So again, the situation is clearly unfolding there,” Rice said.

The IMF and World Bank in 2019 wrestled with the question of whether to recognize Venezuelan opposition leader Juan Guaido’s claims as country’s legitimate leader, challenging the government of Nicolas Maduro after the United States and more than 50 countries did so. Such a move was viewed as a requirement for the institutions to re-engage with Venezuela, but Maduro ended up maintaining power.

The US Biden administration, which controls the IMF’s dominant shareholding, has threatened to impose sanctions against Myanmar as the military regime seeks to tighten its grip on power.

Sources familiar with the Myanmar payment said the timing of the transfer was unfortunate, and the design of the Rapid Credit Facility and Rapid Financing Instrument loans mean that funds go out all at once with little conditionality.

Rice defended the rapid-disbursing emergency facilities that the IMF has used to help some 85 countries cope with the pandemic, saying they were a “huge help” to the poorest states.

Part of their effectiveness has been the IMF’s ability to get the aid out quickly with relatively few conditions.

Asked whether the IMF had concerns about Myanmar’s central bank independence after the military government appointed a junta-era official, Than Nyein, to head the Central Bank of Myanmar, Rice said that central bank independence “is one of the fundamental principles that IMF believes in and supports.”