Implementation of Minsk Agreements a condition for IMF credits–Lagarde

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3/4/2015

Largarde: IMF credits to Kiev depend on implementing of the Minsk Agreement.

Translated from Russian by J.Hawk

The IMF Executive Director Christine Lagarde made this
statement during an interview on the MSNBC TV channel. According to Lagarde,
financial aid to Kiev will depend on the stability of situation in Eastern Ukraine.

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Lagarde also said that Ukraine is right now in a serious
economic crisis which is affecting both the country’s economy and budget, to
the point of putting it on the edge of default.

“The government is trying to improve the situation through
external borrowing. The IMF opened a two-year credit line for Ukraine with up
to $17.5 billion available. The overall financing of Ukraine by IMF and other sources
may reach $40 billion,” underscored Lagarde.

The IMF Board of Directors is expected to approve the new
Ukraine aid packet on March 11.

Lagarde also said that the crisis in Eastern Ukraine is
seriously delaying economic reforms.

“European politicians are in agreement that the only way to
resolve the crisis in Ukraine is through the Minsk Agreement. The meeting of
Russian, Ukrainian, French, and German leaders in Minsk on February 12 resulted
in a set of measures which include a ceasefire starting on February 15,
followed by a withdrawal of heavy weapons and the establishment of a security
zone.”

J.Hawk’s Comment: Lagarde is no doubt honest about her desire to avoid further fighting. After all, if Kiev defaults, it’s IMF’s money on the line, after all. It’s another question what Kiev’s priorities are. It seems unlikely that there will be any fighting prior to the next IMF tranche. However, after March 11 all bets are off. Zakharchenko did warn of a likelihood of escalation in February-April time-frame, and it may well be that the current calm is simply motivated by the need to get the money from the IMF, then resume fighting.  Western leaders are already making statements to the effect that any violation of Minsk Agreements would result in new sanctions against Russia. Are these statements motivated by the obvious weakness of Kiev’s military forces and by concern that Novorossia might want to exploit that weakness, or diplomatic and ideological preparation for the next Kiev provocation?

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