IMF recognizes status of Ukraine’s debt

Ukraine’s debt to Russia is set to mature on December 20th.  Recently, however, the International Monetary Fund (IMF) lifted the ban on lending to countries with existing overdue sovereign debt, so Ukraine’s unpaid "debt of Yanukovych" will not prevent the IMF from further cooperation with Kiev.

The Executive Committee of the IMF officially recognized the $3 billion Eurobond that Ukraine owes to Russia as sovereign debt, not commercial. Consequently, Ukraine will have to demonstrate that it is negotiating with Russia to pay off its 2013 debt. "The Russians have asked that we recognize the official claims.  The available information confirms this position," the IMF report stated. This enables the IMF to continue to work with Ukraine's economic restructuring.

Earlier this month, the Executive Board of the IMF decided to lift the ban on lending to countries with overdue sovereign debt. This decision was directly related to the inability of Ukraine to repay its Eurobond debt to Russia within the repayment period which expires on December 20th. The decision was criticized by Moscow, and the Russian authorities intend to sue Kiev if the loan is not repaid on time. “I have a feeling that they [Ukraine] will not return anything… because they are crooks,” Russian Prime Minister Dmitry Medvedev said.

The Eurobond debt is referred to as "Yanukovych's debt," because the money was granted by Moscow to Ukraine under the leadership of the former President Viktor Yanukovych.  On Thursday, the Ukrainian Finance Minister said Kiev was committed “to negotiating in good faith a consensual restructuring”, but reiterated that the full debt would not be paid by Sunday’s deadline. According to the IMF’s new policy, this commitment will mean that Ukraine is not automatically disqualified from receiving emergency bailout funds.

 

  Ukraine, IMF, Russia, Economy of Ukraine

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