Russia to vote against IMF extending aid to Ukraine

A general view shows Independence Square in central Kiev, Ukraine. © Valentyn Ogirenko
Moscow will oppose a bailout extension by the International Monetary Fund to Ukraine. The extension would violate IMF rules on providing aid to countries with unresolved sovereign debt, according to the Russian Finance Ministry.

The ministry insists Ukraine has not fulfilled all the financing conditions because the country has not repaid its $3 billion debt to Russia due last December.

"Today, we will give the necessary orders to our representative at the IMF that in the vote on the extension of the IMF aid package to Ukraine, we will vote against such a decision. We believe it is being taken in non-compliance with applicable rules,” said Russian Finance Minister Anton Siluanov.

The question of the allocation of money to Ukraine will be considered under the new rules on Tuesday. In December 2015, the IMF lifted the ban on lending to countries with expired sovereign debt. Now, the debtor is required to be in dire need of financial aid and to hold active talks to reach a settlement with the lender.

According to Siluanov, Ukraine hasn’t sent any official request to start negotiations on the restructuring of the debt to Russia, which is $3 billion plus interest. A Moscow vs. Kiev case will be heard in London in January next year. The funds were provided by Russia in 2013 through the purchase of Ukrainian Eurobonds.

READ MORE: Moscow sues Kiev in London over $3bn debt

Ukrainian Finance Minister Aleksandr Danilyuk has said Kiev is ready to settle with Moscow, but is also preparing for trial. In July, Danilyuk said it was a “political loan we were force to take” and “our position is that we should not return the money.” Kiev authorities insist the Kremlin provided the funds in exchange for Ukraine’s severing an association agreement with the EU.

READ MORE: Kiev imposes indefinite freeze on foreign debt repayment

The Russian vote will be not enough to block the decision to finance Ukraine, as it has only a 2.6 percent voting share against US 16.5 percent, Germany’s 5.3 percent and the UK’s and France’s four percent.

The four-year program of state aid to Ukraine is worth $17.2 billion. In 2015, Kiev received two tranches, $5 billion in March and $1.7 billion in August. Kiev was to receive another three $1.65 billion tranches last year and to get $600 million each quarter in 2016-2018. Ukraine received only the first two tranches, as it didn’t fulfill the funding conditions. The IMF criticized Ukraine for the lack of progress in fighting corruption, slow privatization of state assets and delays in reforms.