FX.co ★ IMF alters lending policy to rescue Ukraine

The International Monetary Fund board of directors agreed to alter the lending policy in spite of the fact that Russia’s representatives in the IMF voted against. New rules allow lifting the ban on lending to nations with overdue sovereign debts. Russia’s officials were strongly opposed to the changes which give the fund the right to continue financial support for Ukraine. The alteration allows the IMF to keep on lending to countries in default although the former policy included a restriction on a financial assistance to those with such credit history. Now Kiev is widely expected to default on $3 billion of its Eurobond debt to Russia. The government of Yanukovych received this money for a refusal to sign the agreement on Ukraine’s integration into the European Union. Current Ukraine’s authorities assume this debt to be commercial rather than sovereign. Moscow in its turn announced that the decision was unfair. "Terms worked out by years are ruined. Financing rules for the Fund programs exist for decades and remain unchanged. The sovereign lender always had a priority against the commercial ones. The rules highlighted a special role of the official creditor, which is particularly important in periods of crisis, when commercial lenders look away from the country and deprive it from access to resources. The decision to change rules appears hasty and biased. It's taken exclusively to the detriment of Russia and in order to legalize Kiev not repaying its debts,” Russia’s Finance Minister Anton Siluanov told journalists. Now the Russian authorities can experience being a cheated lender. They will find out what deposit holders feel losing all their money. In other words, big fishes will reflect on how ordinary people live. As for the IMF membership, it is not obligatory and every member can leave the fund any time.