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 IMF to alter lending policies to keep Ukraine bailout on track, - The Wall Street Journal

Ukraine’s Western allies are preparing to accelerate planned changes to the International Monetary Fund’s lending policies to prevent Russia from stymieing a $25 billion rescue package for the war-torn nation.

This is reported by The Wall Street Journal, Censor.NET informs.

Current IMF policy prohibits the IMF from lending to countries that are in arrears to other governments. The Kremlin has rejected Ukraine's invitation to participate in a restructuring of the country's debts and Kiev has said it won't pay all of the $3 billion due to Moscow by the end of the year. That means the IMF's lending policy potentially jeopardizes its $17 billion bailout and the other Western aid that is contingent on the fund's program.

But 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 people familiar with the matter.

Read more: Kyiv will not pay its Russian debt without restucturization, - PM Yatseniuk

Ukraine 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."

The IMF's board is tentatively set to consider the change in late November after leaders from the Group of 20 largest economies meet in Turkey.

Read more: Russia wants to ruin Ukraine and hold a veto over efforts to rescue it, - Financial Times

Douglas Rediker, a fellow at the Peterson Institute for International Economics and former U.S. representative to the IMF's board, said changing the arrears policy would allow the IMF "to avoid an outcome where Russia could hold the fund program hostage." Mr. Rediker said the fund could create a new exemption to the existing sovereign-arrears policy that sidestepped official creditors deemed by IMF shareholders as acting in bad faith with a member country.

Moscow bought the $3 billion bond issued in the last days of the Viktor Yanukovychgovernment, just a few short weeks before the president was ousted by pro-democracy protesters in early 2014. The bond was an effort by the Kremlin to prop up an administration friendly with Russia as it fought against the rising tide of Western-friendly voters who sought greater integration with the European Union.
 
 
 
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