REUTERS
Ukraine's Western allies are preparing to accelerate planned changes to the International Monetary Fund's (IMF) lending policies to prevent Russia from hindering a $25 billion rescue package for the war-torn nation, The Wall Street Journal reported citing people that are familiar with the matter.
"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 Kyiv defaults on its loans to Russia," according to a report.
It is noted that Ukraine's 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."
Read alsoS&P raises Ukraine’s sovereign credit ratingsThe IMF Board is set to consider the change in lending policies in late November after leaders from the Group of 20 largest economies meet in Turkey.
Douglas Rediker, a fellow at the Peterson Institute for International Economics and former U.S. representative to the IMF's board, said altering the lending policy would allow the IMF "to avoid an outcome where Russia could hold the fund program hostage.
He also noted that in this way the fund can also reduce its dependence on official creditors, the IMF shareholders, deemed as acting in bad faith with a member country.
Read alsoPutin tests English Debt Law as Ukraine feud heads to LondonAs UNIAN reported earlier, Ukraine's restructuring perimeter includes a loan which was granted to Ukraine in the framework of agreements between Russian President Vladimir Putin and the then Ukrainian President Viktor Yanukovych. The loan was granted on December, 2013, in exchange for Ukrainian Eurobonds worth $3 billion. The fact that the bonds were purchased via the Irish stock exchange makes the disbursement a private creditor debt. However, the Russian side insists that this is an interstate debt, as the buyer was a state-owned National Wealth Fund. Ukraine has included the $3 billion eurobond among the sovereign and sovereign-guaranteed bonds to be restructured, butRussia reiterated it does not see the debt as commercial.
As UNIAN reported earlier, Ukraine and the ad hoc creditors' committee on August 27 agreed on restructuring part of sovereign debt to the tune of $18 billion. The restructuring involves a complete write-off of $3 billion, a four-year deferral of principal debt repayment, as well as the establishment of a single 7.75% interest rate for the bonds.