In January 2003 the IMF suspended loan payments to Azerbaijan because of concerns that the government was to use the State Oil Fund to invest in the Baku Ceyhan oil pipeline. This was reversed in February 2003, apparently under US pressure. Whilst allowing $118 million to be spent on the pipeline – against the principles for which the fund was established – the IFIs are pressing for new legislation governing oil fund expenditure. This would replace the present system under which the president’s office spends the money directly. The World Bank has also demanded an audit of the state oil company.
Renewed calls for a substantial SDR allocation raise urgency of reforming the inequitable global reserve ‘non-system’.
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