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Thursday, March 22, 2018

Kiev only represents a desire to negotiate the repayment of debt to Russia

Russia will vote against granting Ukraine the next tranche of the IMF. Kiev is not only not agreed with Moscow to restructure its debt by $ 3 billion, but also lying, claiming that conducts such negotiations. And this at a time when Russia continues to provide Ukraine with substantial financial support.

Ukraine has not fulfilled all conditions to receive the next tranche of the IMF. Therefore, Russia will vote against it, said Finance Minister Anton Siluanov.

“Only as a result of zeroing of the export duty on gas supplies to Ukraine Russia’s contribution to the stabilization of the Ukrainian economy amounted to more than $ 1 billion”

Wednesday, September 14, the IMF Executive Board plans to hold a meeting for defrosting Ukrainian credit programs to 17.3 billion dollars. Really Kiev has received from the IMF in 2014-2016 only 6.6 billion And the last tranche of $ 1.7 billion was more than a year ago, in August 2015.

The new tranche was to be again 1.7 billion, in the summer of Kiev counted on even more given the lost time. But now he will be happy and $ 1 billion, most importantly, to give. And for that Ukrainian officials have put a lot of effort.

The IMF delayed a loan for a reason. Thus he was forced Kiev to honour the commitments made in the framework of the programme support. For example, the Fund’s experts were instructed to remove subsidies to utilities and to bring gas prices to European levels. In the end, the majority of the population now earns less than makes the monthly payment for utility services. The same series is the desire of Ukrainian officials to make hospitals, schools and kindergartens earning his pay for communal.

Kiev is ready to go to any austerity measures while refusing to admit the obvious – their obligations as a state towards another state. Recall that Russia lent Ukraine $ 3 billion in late 2013. The key to become Ukrainian Eurobonds placed on the Irish stock exchange, their buyer was the national welfare Fund of the Russian Federation.

Ukraine has not only delayed the payment of the debt in December 2015, but does not negotiate with Russia to resolve the issue. Even after the IMF late last year, acknowledged the debt of Kiev before the Russian Federation as debt to official creditor. It is, in fact, put an end to the dispute of Russia and Ukraine. The latter insisted on the fact that it is a commercial debt, and therefore the proposed conditions of restructuring as other commercial creditors. But the IMF ruled in favor of Moscow, which was originally explained that it is official debt. This means that the country is obliged to repay it, and on more attractive terms. As Siluanov said, “such treatment is official duty approx.) according to established international practice, should be a prerequisite for beginning the negotiation process.”

However, Kiev’s lying about already negotiating with Russia for this reason. “All attempts to hold any negotiations at the Ministerial level, at the level of consultants, in fact, was a “fake”, – said Siluanov (quoted by TASS) – We have not received official requests from the Ukrainian side about the beginning of the negotiation process, the beginning of a process of debt restructuring.”

On Monday evening, Kyiv has once again claimed that he is ready to negotiations with Moscow on the debt. Moreover, “Ukraine is open to an agreement out of court, subject to the conditions”, RIA “news” words of the Ukrainian Minister of Finance Alexander danyluk. In fact, in terms of that catch- Russia and Ukraine are absolutely different understand the principles of debt repayment.

Moscow has invited Ukraine to repay the debt with installments – $ 1 billion a year for three years. But Kiev insisted on a partial debt relief, in particular, to write off 36%, which is even worse proposals for commercial lenders.

Ukraine is continuing to engage in demagoguery, preferring not to acknowledge the debt in 3 billion dollars in order to pay it. Arguments, of course, political – because this loan was taken by Victor Yanukovych. The Russian Ministry of Finance also surprising is the position of the IMF on this issue, which pretends that there is no problem and debt.

The Foundation even made changes to its policy on the provision of funds to the country, which has a delay ahead of the official lender. Previously, the IMF never gave loans to countries that have committed official default. Ukraine may become the first.

On the other hand, the IMF program to reduce the debt of Ukraine is without regard to Russia. That is the IMF ready to help Ukraine to pay for these $ 3 billion. “Initially, the Fund has set targets to reduce the debt of Ukraine without taking into account the interests of Russia, and our $ 3 billion debt was included in the list of obligations subject to restructuring. In the period of the program means that Ukraine should return to Russia, of course, was not included. Until 2018, the program is designed so that Russia gets not a penny of that debt, which is in Ukraine,” says Siluanov.

As debts rose Ukrainek the way, Siluanov estimates that Russia has over the years provided financial support to Ukraine in the amount exceeding USD 3 billion, which Kiev does not want to give. Russia is not just going toward “our neighbor and partner, seemingly in a state of tension.”

In particular, only as a result of zeroing of the export duty on gas supplies to Ukraine, Russia’s contribution to the stabilization of the Ukrainian economy amounted to more than $ 1 billion, said the Finance Minister. We are talking about the discount for Ukraine on gas supplies. And it has played a significant role in the fact that the previous two winters in Ukraine and in Europe has not happened gas of the Apocalypse in the middle of winter. All international assistance to Ukraine, according to Siluanov, was 3.6 billion.

In addition, the Russian state-owned banks participated in the capitalization of its “daughters” in Ukraine and put them in the order of $ 3 billion. The withdrawal of Russian banks from Ukraine would provoke the most powerful financial crisis in the country. Not to mention Ukrainskij the customers who would be left without their savings. However, the Russian state-owned banks did not undermine the already weak Ukrainian economy.

Moreover, Russia is still ready to sit down at the negotiating table about 3 billion dollars of the Ukrainian debt. “We will be ready to consider pre-trial agreement provided that the proposals of the Ukrainian side will be significantly different from the proposals that were willing commercial lenders. We will not be able to agree, if the Ukrainian side will take the same position,” once again explained Anton Siluanov.

The vote of Russia against the provision of the IMF tranche to Ukraine amid its officially overdue debt is unlikely to interfere with the Fund to implement the plan. The voting system within the IMF based on the quota system, the number of votes determined by the amount of participation of any country in the capital of the Fund. The major shares are still owned by the United States is 16.7%, which allows them to block any decision. Russia has 2,734%, China – 3,721%.

China is unlikely to vote against the next tranche of Ukraine, to support in this matter of its strategic partner Russia. Because the Chinese are pragmatic, and between long-term strategy and immediate and obvious benefit will always choose the former, according to Sergei Dushechkin of Analytics Online. The Chinese would abstain in order to please both, he adds.

The result of the decision to allocate the tranche of Ukraine will depend on the views of the G7 countries and increasingly the United States. “Any serious change of moods in relation to Russia from other members of the IMF, alas, has not happened yet. A new tranche from the IMF will likely be approved,” – said Dushechkin.

“Given the high level of politicization of economic decisions around the Ukraine, most likely, all its actions and proposals, including the most absurd, will be considered as an attempt to establish a dialogue with Russia on the debt. Therefore, the absence of any specific agreement on debt restructuring will not be an obstacle for decision-making”, – said Alexander Egorov from TeleTrade.


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