Wednesday, December 17, 2014

Going To The Dogs — IMF, World Bank Halt Lending To Ukraine | Dances With Bears

Multi-billion dollar lending to Ukraine by the International Monetary Fund (IMF) and World Bank has stopped amid growing doubts among country board directors at the two international organizations that the Ukrainian Government can meet repayment commitments and loan covenants for 2015, or deliver on reform promises and budget financing targets tabled in Kiev this week.

For the first time since the change of government in Ukraine last February led to civil war in the east of the country, European bankers and multilateral fund sources acknowledge that Kiev is now likely to default on its international debts, and will seek a reorganization of its bond debt. This will hit Franklin Templeton, the US investment fund which has accumulated up to $9 billion in Ukrainian bonds on a wager to make a $4 billion profit – if the US Government guarantees full and timely repayment.
IMF officials refuse to elaborate on the new terminology which the Fund began issuing last week to describe the suspension of cash disbursements under the Fund’s existing $17.1 billion programme, started last May. For the fine print of the IMF programme, read this and more.

David Lipton (below, left), the former US Treasury and White House official who is now deputy chief executive of the Fund, announced in Kiev on Friday: “A Fund team conducting technical discussions is expected to conclude its work by the end of the coming week. A mission to conduct policy discussions in the context of the Fund-supported program is expected to return to Kyiv early next year.” He said this after meetings with President Petro Poroshenko, Prime Minister Arseny Yatseniuk, Minister of Finance Natalie Jaresko, and Minister of Economy Aivaras Abromavicius. Jaresko (below, right) is an American national; Abromavicius, Lithuanian.

A spokesman for the IMF in Washington was asked to say who is in charge of the current “technical discussions”, who will head the delayed “policy discussions”, and what the difference is between them. The spokesman said this morning: “The head of the IMF technical mission, which is currently working in Kiev, is Mr. Gueorguiev, and he will also lead the mission for policy discussions early next year. Technical missions focus more on collecting data and discussing technical issues while missions for policy discussions focus on policy discussions.”

Complete story at - Going To The Dogs — IMF, World Bank Halt Lending To Ukraine – $4 Billion Ukraine Bond Wager Goes Bad For Franklin Templeton | Dances With Bears

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