Sunday, December 13, 2015

IMF Changes Debt Rule - Ukraine Can Now Default on its Debt to Russia

This is a story we have followed here for some time. The Ukraine has a $3 Billion debt due Russia soon. IMF rules were such that if the Ukraine defaulted on that debt, it would put IMF loans to the Ukraine in jeopardy. So the IMF changed the rules making it OK for the Ukraine to default. Problem solved. Per this Reuters article, Russia is unhappy but will not leave the IMF over it. Below are some quotes.

Russia has no plan to cancel its membership in the International Monetary Fund after the organization changed its operating rules in a way that may support Ukraine in a debt dispute with Russia, Finance Minister Anton Siluanov said on Thursday.
A default by Kiev on $3 billion of debt owed to Moscow on Dec. 20 would have put its IMF-led $40 billion bailout at risk.
But the IMF on Tuesday changed its rules to allow it to keep supporting countries even if they fail to repay official debt, prompting Russian Prime Minister Dmitry Medvedev to accuse the multilateral institution of meddling and say the decision was politically motivated.
But Siluanov said that Russia did not plan to leave the Fund and that in general the IMF was conducting the "right policy."
"We are one of the Fund's key members. Despite the difficult situation that has happened, we don't consider it necessary to leave the Fund," Siluanov said.
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