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Russia’s finance minister slams IMF policy on Ukraine’s debt

December 10, 2015, 9:27 UTC+3 LONDON

Russian Finance Minister Anton Siluanov's article was published by the Financial Times on Wednesday night

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Russian Finance Minister Anton Siluanov

Russian Finance Minister Anton Siluanov

© Anna Isakova/Russian state Duma press service/TASS

LONDON, December 10. /TASS/. The decision of the International Monetary Fund (IMF) related to Ukraine’s sovereign debt has caused doubts about "the impartiality of an institution that plays a critical role in addressing international financial instability," Russian Finance Minister Anton Siluanov said in an article published by the Financial Times on Wednesday night.

"Imagine the Greek government had insisted that EU institutions accept the same haircut as the country’s private creditors," the article says. "The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine’s $3bn eurobond held by Russia."

"The IMF, which has long refused to lend to countries that are in arrears on payments to official creditors, earlier this week acceleratedring may raise questions as to the impartiality of an institution that plays a critical role in addressing international financial instability."

The Russian finance minister said that the repayment of sovereign debts in the world over the past 50 years "has been successfu a change to this policy in advance of the December 2015 maturity date on our Eurobond," Siluanov said. "Russia has no desire to see the IMF curtail its funding programme for Ukraine, but we are concerned that changing this policy in the context of Ukraine’s politically charged restructul in large part due to the work of the IMF."

"Its well-founded principles should be changed only after due consideration, and not in response to the politics of the moment," he said in the article.

Earlier, IMF Executive Board had lifted the ban to lend to countries if they fail to repay official creditors although Russia voted against it. In particular, the decision means that the IMF will continue implementation of its anti-crisis programme on Ukraine even if Kiev defaults on its payments to Russia. Respectively, the policy will include other countries that fell behind on payments to official creditors but receive the IMF credit support.

Dispute over Ukraine’s debt

In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovych agreed that Moscow would grant Kiev a credit worth $15 billion through the placement of Ukrainian securities. Under this program bonds for 3 billion dollars were placed on the Irish Stock Exchange on December 20, 2013. Russia purchased the bonds using the funds from its National Welfare Fund.

Kiev says that the debt should be restructured as private but Russia says it is a sovereign one. In mid-November President Vladimir Putin said that Russia had offered Ukraine to repay its $3 billion debt by $1 billion annual instalments in 2016-2018. Putin stressed that Russian not only offered the restructuring but also the terms which are better than those that were asked by the IMF.

Later, Siluanov said that Russia was ready to restructure Ukraine’s debt if either the United States or the European Union, or any major bank would provide their guarantees agreed with Russia. He said Russia’s proposal to restructure Ukraine’s debt would help the IMF avoid making a precedent when the rules for providing financial aid is changed.

Last time Ukraine made bond interest payments in June 2015.

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