Russia says to oppose new IMF aid tranche to Ukraine

September 12, 2016 8:10 AM EDT

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By Darya Korsunskaya

MOSCOW (Reuters) - Russia will vote against a new tranche of financial aid from the International Monetary Fund to Ukraine but is willing to discuss an out-of-court settlement over Kiev's debt to Moscow, Russian Finance Minister Anton Siluanov said on Monday.

The IMF, which last year changed its rules to keep lending to countries such as Ukraine that are in arrears to official creditors, will decide on Sept. 14 whether to release a loan tranche to Kiev which could amount to as much as $1.7 billion.

Russia has filed a lawsuit against Ukraine at London's High Court in February demanding repayment of a $3 billion Eurobond, which matured in December last year, after Kiev insisted that Moscow must accept restructuring terms agreed with other foreign creditors.

Siluanov, speaking to journalists at a briefing, said Ukraine had never met the condition needed for the new IMF policy to work, of negotiating in good faith, so the IMF should pull its aid to Ukraine.

"It's possible that the Fund does not have full information about the scope of the (Russia-Ukraine) negotiations, although that would be strange," Siluanov said, adding that Russia would send a letter to the IMF Managing Director Christine Lagarde explaining its position.

"We will vote against this (approving loan tranche) as we believe it is not compliant with the rules."

Ukraine argues that the original loan agreement was invalid because Russia applied economic and political pressure on it in 2013 to accept it.

"I doubt Russia can block the next IMF disbursement, as (it is) likely Western countries supporting Ukraine have a majority and would be willing to force this through, but it makes life uncomfortable for the IMF board and we might see an attempt to stall, (to) further review the decision," Timothy Ash, chief emerging markets strategist at Nomura in London, said in a note.

The first court hearing is scheduled for Jan. 17, but Siluanov said Russia was ready to talk about an out-of-court settlement if Ukraine changed its proposals on how to restructure the debt.

Siluanov said there were preliminary plans, brokered by Germany, for him to hold talks with his Ukrainian counterpart, Oleksandr Danylyuk, on the sidelines of the annual IMF/World Bank meeting in Washington on Oct. 7-9.

(Reporting by Darya Korsunskaya; Writing by Lidia Kelly; Editing by Katya Golubkova and Gareth Jones)

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