New IMF Tranche to Kiev Depends on the Payment of Debt to Moscow

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Translated by Ollie Richardson for Fort Russ

4th March, 2016


The Board of Directors of the International Monetary Fund, when deciding on the allocation of the next tranche of the loan to Ukraine, will take into account the integrity of their efforts on the settlement of debt to Russia, said the IMF Director of communications, Gerry Rice, at the regular press briefing.

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“We are not part of the negotiation process on the debt. We continue to urge Russia and Ukraine to come to the negotiating table. And the so-called integrity is what the Board of Directors will take into account when approving the second review of Ukraine,” Rice said.

He added that for the completion of the second review of the programme of assistance to Ukraine and, accordingly, the allocation of the next tranche of the IMF loan, it is also necessary to obtain greater clarity from the authorities of Ukraine in fulfilling their commitments to implement reforms and combat corruption.

The amount of overdue debt of Ukraine amounts to $3.075 billion. The Ministry of Finance in December 2013 bought, at the expense of the National Welfare Fund, two-year Ukrainian Eurobonds at a rate of 5% per annum. Ukraine regularly serviced this debt until December 2015, when Kiev imposed a moratorium on the payment of the last coupon of $75 million and the repayment of the principal amount of the debt. The Ukrainian government offered Russia to participate in debt restructuring on the same basis as other holders of commercial releases of Eurobonds of the country. Russia has repeatedly stressed the inadmissibility of the sovereign debt restructuring of Ukraine on equal terms with private debt.

The IMF, in December 2015, lifted restrictions on lending to countries with arrears on sovereign debts, which opened up the Fund’s ability to continue lending to Ukraine even if Kiev cannot produce periodic repayment of the $3 billion Eurobonds.

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