Saturday, June 13, 2015

Wrong end of the Black Sea

IMF statement via open letter from Christine Lagarde:

Rapid completion of the debt operation with high participation is vital for the success of the program, since Ukraine lacks the resources under the program to fully service its debts on the original terms. The IMF, in general, encourages voluntary pre-emptive agreements in debt restructurings, but in the event that a negotiated settlement with private creditors is not reached and the country determines that it cannot service its debt, the Fund can lend to Ukraine consistent with its Lending-into-Arrears Policy. 

Two observations.

1. It's revealing to note how the IMF behaves in insisting on debt restructuring when it's not saddled to the European Union institutions as in Eurozone programs.

2. Are there other entities, such as those around the table on Greece, who need to take note that the IMF might find ways to lend to a country that owes them money? 

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