Actually already admitted as much earlier this month when it changed the rules that allow it to continue to prop up debtors after they fail to repay sovereign debt
Originally appeared at Forbes
Russia apparently is not always blowing smoke. Sometimes they’re actually telling it like it is.
The International Monetary Fund said on Wednesday that the $3 billion Russia loaned to Ukraine in 2013 was indeed an intergovernmental loan and not a private one as Kyiv contests. The Ukrainian government argued that Russia’s loan came from their National Wealth Fund and not directly from the Russian government and should therefore not be part of the IMF rules that require Ukraine to make good on sovereign debts as part of its bailout package.
The IMF agreed with the Russian government today, stating that Russia could not loan the money directly from the Russian budget because it was not allocated to do so at the time. Back in 2013, the Russia friendly Viktor Yanukovych was in power. He was ousted through extra legal means in the Euromaidan protests in February of 2014 and replaced byWashington’s handpicked successor Arseniy “Yats” Yatsenyuk. The IMF said that the money from the Russian sovereign wealth fund constituted government funds and was therefore a sovereign credit, as the Russian government declared.
Moreover, the Russian government confirmed to Euroclear, at the request of the Ukrainian authorities at the time, that the Eurobond was fully owned by the Russian government. The IMF said in a statement that the Eurobond was ”an official claim” by the Russian government and fit the purposes of the IMF policy of debt in arrears to official creditors. The Eurobond is held by the Russian sovereign wealth fund, an agency acting on behalf of the Russian government and the money originates from a transaction where the fund acted on behalf of the Russian government to provide financing to Ukraine. The decision by the IMF today puts further funds in jeopardy, unless Kyiv can agree to a refinance deal, or pay the debt in full.