According to a Bloomberg source familiar with the matter, Russia wants to block the International Monetary Fund’s next loan payment if Kiev defaults on its $3 billion debt to Moscow in December
Even though the IMF’s policy is against giving loans to countries that default on other government debt, it agreed to give the promised $17.5 billion loan to Ukraine which currently default on its debt to Russia. The IMF might agree to loan Ukraine if the nation meets its obligation and bargains in a good faith with the creditor country.
In such a case the Russian authorities may withhold the assurance that Ukraine can repay its debts to Moscow. According to a Bloomberg source, a person aware with the Russian strategies, Russia might argue that Ukraine hasn’t negotiated in a good faith, but it is not sure whether Russia will pursue this opportunity. In August, Ukraine agreed to a deal with a creditor committee on a 20 percent write-down of $18 billion worth of Eurobonds. Russia refused to participate in Kiev’s debt restructuring, insisting it’s a state, not a private creditor.
Last month, Ukraine’s Prime Minister Arseny Yatsenyuk warned that Kiev would suspend payments on Russian debt if Moscow does not agree to restructure the loan.
In 2013, Russian President Vladimir Putin and then Ukrainian President Viktor Yanukovich agreed Moscow would buy $15 billion. After the first $3 billion tranche, Russia decided not to buy the remaining $12 billion following the Maidan events, which then resulted in the overthrow of Yanukovich’s government.