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 Russia has called into doubt the neutrality of the IMF after the International Monetary Fund altered its policy of not lending money to countries that default in sovereign debt, just before Ukraine was due to pay its sovereign debt owed to Russia.

This change means IMF will continue to fund Ukraine, even though its own regulations contain a condition that it will not lend money to nations that default on state debt.

Failing to repay the £3 billion owed to Russia, could see Ukraine declared as a defaulter by mid December, unless Kiev accepts Moscow terms to restructure.

However, the IMF recently announced that following a vote of its board of directors, it has changed its policy and will now allow lending to nations that have outstanding official or state debt.

The decision has angered Moscow, with President Putin threatening legal action on Ukraine if Kiev fails to pay its debt.

Kiev has defended its default, claiming the bonds sold to Moscow in 2013 by President Viktor Yanukovich were not a government loan, but instead constituted a private debt.

Russian Finance Minister, Anton Siluanov, recently told the British press that not only was Ukraine failing to accept its liability, something it was contractually committed to, but also Kiev has refused to offer an alternative.

Indeed, the IMF has previously acknowledged the loan as official sovereign debt and Siluanov believes that this change in IMF policy raises questions of its impartiality.

Based in Washington DC, the IMF and World Bank is an independent body set in 1944 in order to encourage greater monetary cooperation and secure financial stability between nations.

 

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