Russia to vote against IMF’s next loan tranche to Ukraine

12 Sep 16

Russia will vote against the release of the next tranche of an International Monetary Fund loan to Ukraine, the country’s finance minister Anton Siluanov said today.


Russian finance minister Anton Siluanov. Credit:

Russian finance minister Anton Siluanov. Credit:


The country argues that the loan, which could be as much as $1.7bn, does not comply with IMF rules on lending to countries in arrears with bilateral creditors.

It is the latest development in a long running dispute over the repayment of a $3bn eurobond Russia brought from Ukraine as part of a $20bn bailout deal struck between Moscow and Ukraine’s then-president Victor Yanukovych at the height of the country’s civil unrest in 2013.

Until December 2015, the IMF’s rules had barred it from lending to countries in arrears with their creditors. But it overhauled its lending policy, with the Russia-Ukraine dispute thought to have at least some influence on the decision.

Russia argues that a further payment to Ukraine would still be in breach of the new laws because Ukraine did not meet a key condition – the requirement for the debtor to negotiate in “good faith” to reach an agreement on its liabilities.

“It is possible that the fund does not have full information about the scope of the negotiations, although this would be strange,” said Siluanov, according to Reuters. “We will vote against [approving this loan] as we believe it is not compliant with the rules.”

The Russia-Ukraine bailout deal, consisting of the purchase of $15bn in Ukrainian Eurobonds and a $5bn discount on natural gas imports, was suspended when Yanukovych and Ukraine’s pro-Russian government were ousted. However, the $3bn bond had already been paid for. 

Ukraine’s new, pro-Western government argues the original loan conditions do not hold because it was accepted under immense economic pressure and was offered as a means to buy the continuation of a close relationship between Ukraine and Russia.

The country was due to repay the bond at the end of last year after the two nations failed to agree a restructuring arrangement. Russia filed a lawsuit against Ukraine for the repayment of the bond in February.

The first court hearing is scheduled for next January, but Siluanov said Russia was ready to discuss an out-of-court settlement if Ukraine is willing to negotiate on how to restructure the debt.

The IMF will consider later this week whether to grant final approval for the release of the next $1.7bn tranche of a substantial bailout, agreed last year and amounting to $17.5bn over four years.

Initial approval of the tranche had stalled as a result of the slow pace of reforms, especially in regards to corruption, amid political upheaval in the country.

After Ukraine pushed through some key changes to its anti-corruption architecture, the fund announced in May that it had secured initial approval of the tranche. 

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