IMF to change its rules to continue supporting Ukraine
Ukraine’s Western allies are preparing to accelerate planned changes to the International Monetary Fund’s lending policies to prevent Russia from stymieing a $25 billion rescue package for the war-torn nation, The Wall Street Journal reports.
Current IMF policy prohibits the IMF from lending to countries that are in arrears to other governments. The Kremlin has rejected Ukraine’s invitation to participate in a restructuring of the country’s debts and Kiev has said it won’t pay all of the $3 billion due to Moscow by the end of the year. That means the IMF’s lending policy potentially jeopardizes its $17 billion bailout and the other Western aid that is contingent on the fund’s program.
But the U.S. and other Western shareholders are preparing next month to change the fund’s lending policy so the IMF can move ahead with its Ukraine loan program even if Kiev defaults on its loans to Russia, according to people familiar with the matter.
Ukraine Finance Minister Natalie Jaresko told The Wall Street Journal that Russia’s participation in the debt restructuring is an opportunity to “depoliticize the issue, as it offers the same treatment as our other bondholders.” But in comments after meetings with top international officials, the minister signaled the IMF likely wouldn’t let the Russian bond “interfere with the program.”
But Russian recalcitrance on Ukraine’s debt prompted IMF officials to accelerate the more formal review of the policy, the people familiar with the matter said.
Given that Ukraine hopes to secure the next tranche of IMF bailout cash before the end of the year and the Russian-held bonds are due by the end of December, a November decision by the board would pave the way for the fund to give the green light on more aid despite a looming default by Kiev. --0----