Russia will not leave IMF after debt rule change, minister says

MOSCOW (Reuters) - Russia has no plan to cancel its membership in the International Monetary Fund after the organization changed its operating rules in a way that may support Ukraine in a debt dispute with Russia, Finance Minister Anton Siluanov said on Thursday.

Russian Finance Minister Anton Siluanov speaks during a news conference after a meeting dedicated to the BRICS summit in Moscow, Russia, July 7, 2015. REUTERS/BRICS Photohost/RIA Novosti

A default by Kiev on $3 billion of debt owed to Moscow on Dec. 20 would have put its IMF-led $40 billion bailout at risk.

But the IMF on Tuesday changed its rules to allow it to keep supporting countries even if they fail to repay official debt, prompting Russian Prime Minister Dmitry Medvedev to accuse the multilateral institution of meddling and say the decision was politically motivated.

But Siluanov said that Russia did not plan to leave the Fund and that in general the IMF was conducting the “right policy.”

“We are one of the Fund’s key members. Despite the difficult situation that has happened, we don’t consider it necessary to leave the Fund,” Siluanov said.

“The IMF is conducting a right policy aimed at supporting the balance of payments, budget of countries that need financial help ... This is a very important and necessary institution, especially during current uneasy times for the global economy,” Siluanov said.

IMF General Counsel Sean Hagan said the change fixed a long-identified shortcoming.

Related Coverage

“The fact that this reform takes place in the context of a case that illustrates this general weakness I don’t think in any way undermines the value of the reform or the legitimacy of the reform,” he told reporters on a conference call to explain the new policy.

Siluanov said earlier this week that Ukraine had 10 days after the debt falls due either to repay the $3 billion or accept President Vladimir Putin’s restructuring proposal; otherwise Russia would take Ukraine to court.

Ukraine has separately reached an agreement with private creditors to restructure its sovereign and sovereign-guaranteed debt to plug a $15 billion funding gap under the IMF-led $40 billion bailout program. It insists the debt owed to Moscow is commercial, a point on which Russia disagrees.

In an article for the Financial Times newspaper, Siluanov said Russia, “just as America and Britain regularly had, provided assistance to a country whose policies it supported.”

In late 2013, Russia extended a $3 billon loan to Ukraine under its former president Viktor Yanukovich. Public protests against Yanukovich’s swing away from the European Union towards deeper ties with Russia led to unrest and eventually forced Yanukovich to flee.

“We are concerned that changing this (the IMF) policy in the context of Ukraine’s politically charged restructuring may raise questions as to the impartiality of an institution that plays a critical role in addressing international financial instability,” Siluanov wrote.

Additional reporting by Vladimir Soldatkin in Moscow and Krista Hughes in Washington; Writing by Katya Golubkova; Editing by Alexander Winning and Steve Orlofsky