The head of the International Monetary Fund (IMF), Christine Lagarde, has issued a statement saying that using the reserves of the National Bank of Ukraine (NBU) for repaying the country's debts will create new liabilities for the government, which is incompatible with the objectives of Ukraine's debt operation.

"To ensure economic and financial stability, these objectives need to be achieved in a manner consistent with maintaining a strong international reserves position over the medium term, in line with projections under the program. In this regard, the NBU's international reserves cannot be used for sovereign debt service without the government incurring new debt, which would be inconsistent with the objectives of the debt operation. Ultimately, Ukraine's debt repayment capacity is limited by its fiscal capacity," Lagarde said.

She also stressed the importance of "rapid completion of the debt operation" given Ukraine's lack of "the resources under the program to fully service its debts on the original terms."

"The IMF, in general, encourages voluntary pre-emptive agreements in debt restructurings, but in the event that a negotiated settlement with private creditors is not reached and the country determines that it cannot service its debt, the Fund can lend to Ukraine consistent with its Lending-into-Arrears Policy," Lagarde added.