IMF changes policies to credit Ukraine in case of default

WASHINGTON/MOSCOW, Dec 9 (PRIME) -- The board of directors of the International Monetary Fund (IMF) has allowed it to continue crediting a borrower, including Ukraine, even if it defaults on sovereign debt, IMF Executive Director for Russia Alexei Mozhin told PRIME late on Tuesday.

“The decision of the fund’s board of directors allows it to fund f the fund’s programs in conditions of an official debt default under certain conditions,” he said. “I have voted against. I cannot say about the others due to the privacy policy.”

He said that the decision have already come in force and will cover existing bailout programs.

“The decision to change the rules looked hurried and biased,” Russian Finance Minister Anton Siluanov told reporters.

“It is only taken to hurt Russia and to legalize Kiev’s debt non-payment,” he said, referring to Ukraine’s U.S. $3 billion Eurobond that Moscow holds.

“The U.S. unwillingness to solve the problem of the IMF’s capital augmentation ratification looks flagrant (now).

“It looks like it is easier to change the basic principles of IMF operation, which had been formed for many years, and delay decisions on changes to the fund’s charter and its capital, which has been discussed unsuccessfully at the G20 for years, then to solve problems of defaulted countries that implement an IMF program.”

“The fund’s financing rules have existed for decades and have been unchanged. A sovereign creditor always had a priority compared to commercial debt. The rules focused on a special role of an official creditor, which is very important in crisis periods when commercial creditors turn away from a country. I would like to remind you that only Russia supported Ukraine’s economy and issued a loan for the country that had no access to external markets two years ago.”

Russia will initiate a meeting of the fund’s board of directors to confirm the sovereign status of the Eurobond, which matures on December 20.

“The IMF management has already confirmed the official status of the debt. Now we plan to initiate a meeting of the fund’s board of directors for a formal confirmation of the debt’s status,” Siluanov said.

Moscow is also preparing documents to file a court claim against Ukraine’s rejection to redeem the debt. Russia even made a step towards debt settlement and offered restructuring, but Kiev still insisted on holding commercial restructuring talks with Moscow. “We have no choice under these conditions other than use all possibilities to defend our rights as creditors,” Siluanov said.

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