IMF could revise Lending-into-Arrears Policy would allow the fund to lend to Ukraine – IMF representative
The International Monetary Fund (IMF) could revise its Lending-into-Arrears Policy that today does not allow the fund to lend to a fund member-country that has a debt to the official creditor, IMF Director of the Communications Department Gerry Rice has said.
"This has been part of a much broader program of work related to the reform of our lending framework governing sovereign debt restructurings and that program of work has been phased over the last several years and different elements which again we’ve discussed here some of those elements and it includes discussion of reforms that would allow the fund to lend in the presence of arrears to official bilateral creditors in carefully circumscribed circumstances. Again if this is part of an ongoing program of work this element was - in fact has been referenced in the program of work. I would refer you for example to the 2013 board paper which recommended that - let me just quote from it, because I think it helps the context… 'consideration could be given to extend the lending into an arrears policy official bilateral arrears and in that context clarify the modality through which assurances of debt relief are provided by official lenders'," he said at a press briefing in Washington.
The IMF representative did not specify a date for the board meeting or the completion of this particular work, saying that the board would take up this issue in the near future.
As reported, the definition of the status of Ukraine's debt to Russia being $3 billion by the IMF – commercial or official – could influence the future payments under the Extended Fund Facility (EFF) Arrangement for Ukraine. The current IMF policy does not allow lending to fund member-country that has a debt to the official creditor. Thus, if 'Russian' eurobonds are set as official debt, and Ukraine would have arrears on it, the fund would not be able to continue lending to Ukraine under the EFF.
The IFM has not yet defined the status of this loan using their methods, while Ukraine considers it as any other debt on eurobonds.
