The IMF changed the rules of its (poisonous) lending on Tuesday, explicitly to allow Ukraine not to pay its debts to Russia. It is still trying to think of a formulation for the “rationale,” but clearly London and Washington have agreed that confrontation with Russia must be the task of every “Western” institution.
The IMF released the following: “The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors. We will provide details on the scope and rationale for this policy change in the next day or so.”
This rule, for now, will affect only Ukraine and Russia.
The IMF earlier changed its rules to allow lending “into arrears” for Ukraine — lending them more while they were not paying back old IMF loans. Then, IMF Managing Director Christine Lagarde began personally to negotiate write-offs of Ukraine’s existing foreign debt with its creditors — the opposite of the IMF’s policy toward Greece, as was noted, and although Ukraine’s economy and currency are more and more prostrate. Ukrainian President Poroshenko and Prime Minister, Victoria Nuland’s “man Yats,” blatantly used the earlier IMF loan tranches to fund the military for war with Russia.
Wednesday’s declaration means that nations in default on debts to other countries can still receive new IMF loans. Not coincidentally, Ukraine has announced it will not meet its $3 billion debt to Russia due at the end of the year, and has refused to negotiate restructurings offered by Russia.
The Wall Street Journal notes that Russia has rejected Ukraine’s proposal to take a haircut on the $3 billion bond, while Ukraine rejected a Russian counter-offer that would have required Ukraine to pay the entire amount, but over a longer time frame. “That standoff threatened Ukraine’s IMF bailout and other Western aid contingent on the funds financing, including from the U.S. and Europe,” says the Journal.
“I’d like to remind that only Russia offered help to the Ukrainian economy and, two years ago, granted a loan to the country that had no access to external markets,” Russian Finance Minister Anton Siluanov said to journalists on Tuesday. The IMF decision to change its lending policies has been made “in prejudice of Russia and to legalize Kiev’s capacities not to pay its debts,” he said, calling the decision “precipitated and preconceived.”
A commentator on RT TV said the move represents a push by the United States to split the world’s currencies into two blocks: a dollar (Japanese yen, euro, pound) block for which debts MUST be repaid, and all others, explicitly referred to as loans in BRICS currencies, for which repayment is optional.