© Valentyn Ogirenko / ReutersUkrainian President Petro Poroshenko welcomes International Monetary Fund (IMF) Managing Director Christine Lagarde ahead of their meeting in Kiev, Ukraine, September 6, 2015.
The IMF's current policy forbids it loaning to countries that default on other government debt. But last month the organization said it would go ahead with the promised $17.5 billion loan to Ukraine even if the country defaults on its debt to Russia. The IMF might amend its rules, allowing lending as long as the borrowing nation meets its obligations under the IMF program and bargains in good faith with the creditor country.
In such a case the Russian authorities may withhold the assurance that Ukraine can repay its debts to Moscow, according to a person, who has direct knowledge of the Russian strategy, according to Bloomberg. He told the media that Russia could also argue that Ukraine hasn't negotiated in good faith.
Another source told Bloomberg that the Kremlin hasn't yet decided if it would pursue this option.
© Pavel Palamarchuk / RIA Novosti Victoria "F*ck the EU" Nuland's boy 'Yats', wants to welsh on Ukraine's debt to Russia
December's payment of $3 billion in Eurobonds to Russia is the largest due for Ukraine this year. Last month, Ukraine's Prime Minister Arseny Yatsenyuk warned that Kiev would suspend payments on Russian debt if Moscow does not agree to restructure the loan.
In 2013, Russian President Vladimir Putin and then Ukrainian President Viktor Yanukovich agreed Moscow would buy $15 billion in Ukrainian bonds. After the first $3 billion tranche, Russia decided not to buy the remaining $12 billion following the Maidan events, which then resulted in the overthrow of Yanukovich's government.
Comment: If this is true, it would be another well played move by Russia. The IMF has to rewrite its rules to prevent this (they make and remake laws to suit their needs).