Ukraine’s President Poroshenko claimed on Monday 3rd April 2017 that the IMF Board of Directors had cleared a $1 billion tranche for payment to Ukraine.
The IMF has not yet confirmed this report but the Russian agency TASS is reporting that its own sources close to the IMF have also confirmed it.
The IMF’s decision comes a week after London’s High Court granted Russia summary Judgment in the case Russia is bringing against Ukraine for payment of its $3 billion loan.
Though the High Court has awarded Russia Judgment in the case, Ukraine is not yet technically in default on this loan because of the stay it was granted pending its appeal to the Court of Appeal. In addition the High Court has itself to rule on the precise amount Ukraine owes Russia. Once that happens and after the stay is lifted – either because Ukraine fails to appeal or because Ukraine’s appeal fails, Ukraine will formally be in default.
It seems that Ukraine’s supporters on the IMF Board have pushed to give Ukraine the $1 billion it needs before any of that happens. That IMF chief Christine Lagarde herself has doubts about the wisdom of this course is shown by the fact that she reportedly found a way to stay away from the Board meeting that took the decision.
As I discussed previously, this is a very high stakes game. The fact the IMF has decided to grant Ukraine a further $1 billion tranche despite the High Court Judgment shows the strength of support Ukraine has on the IMF Board. The IMF could soon however start to find itself in serious legal difficulties if it persists in lending to Ukraine after the High Court formally declares Ukraine in default.