Russia declared the illegality of the new IMF loans for Ukraine

The resumption of lending to Ukraine by the International monetary Fund (IMF) will constitute a breach of its own rules, the IMF, Russia will vote against granting Ukraine credit tranche, said Monday at a briefing, Russian Finance Minister Anton Siluanov.

The IMF Executive Board plans on Wednesday, September 14, to hold a meeting on the issue of unfreezing of the Ukrainian credit program at the $17.3 billion In early September, IMF spokesman Gerry rice said that Ukraine is close to getting the next tranche remained “several technical issues”.

“Today we will give necessary instructions to our representative at the International monetary Fund that in addressing the issue of the tranche of the IMF loan to Ukraine, we will vote against this decision because we believe that it was made in contradiction with applicable rules,” — said Siluanov (quoted by “RIA Novosti”). Russia considers unfounded the statement of the IMF that Kiev has fulfilled all conditions to receive the next tranche. In particular, Russia does not agree that negotiations on the restructuring of the Ukrainian debt of more than $3 billion was bona fide, as required by the rules of the IMF.

According to Siluanov, Ukraine instead of constructive negotiations on the restructuring proposed to write off 36% debt to Russia that Moscow cannot seriously consider such a proposal.

Siluanov said that at the beginning of October he intends to meet with Ukrainian Finance Minister in Washington on the sidelines of the meeting of the IMF and the world Bank, under the mediation of Germany, which previously tried to organize a dialogue between Kiev and Moscow on the debt issue.

Ukraine at the end of 2015 refused to repay Russia a debt of $3 billion, provided during the presidency of Viktor Yanukovych in the form of purchase of Ukrainian Eurobonds. In response, Russia filed a lawsuit against Ukraine in a London court. At the end of July 2016, Russia asked the court to review the case in an expedited manner. The hearing is scheduled for 17-20 January 2017. The Russian Ministry of Finance stated that if the court agrees to an accelerated procedure, the final decision can be made in early 2017. Ukraine has not paid Russia $3 billion of the principal debt plus a coupon for $75 million in addition, the protection of the Russian side believes that the debt to accrue penalties at the rate of up to $683 thousand a day. In this case, the outstanding debt of Ukraine to Russia has exceeded $3.2 billion.

The IMF in December of 2015 has revised its policy on lending to countries which have overdue debts to sovereign creditors. The new rules allow Ukraine to receive loans from the IMF even in default. However, for this to occur a number of conditions, including the fact that “good faith negotiations” between the sovereign creditor (Russia) and the borrower (Ukraine).