Time to put the hurt on the Ukraine.
Since everything in Greece is going swimmingly and everything in Puerto Rico drowning-ly, our thoughts turn to the other sovereign/semi-sovereign in need of some debt restructuring: what’s left of the Ukraine. Last we checked, the country’s bondholders agreed to get into the barber’s chair, but only for a trim of their flowing debt. And the Ukrainian finance ministry echoed the Greek, saying it expected a deal on just how much it can cut off by the end of the week.
What can stop this new era of good feelings, you might ask? Allow us to introduce you to Vladimir Putin. You see, the folks at the International Monetary Fund don’t trust him, and even if they are willing to consider the $3 billion he lent his buddy the former Ukrainian president just before his ouster a down payment on the Crimea and however much of the eastern Ukraine he decides is and has always been Russian, Vlad the Invader is less certain. And the IMF doesn’t like uncertainty.
“Risks to the outlook remain exceptionally high,” the IMF’s economists said, largely pointing to the threat of the conflict escalating….
Under the IMF’s rules, the fund can’t lend to a country that owes debt to official creditors, such as the Russian government. Moscow says that $3 billion debt is “official” and the Kremlin isn’t prepared to restructure. Ukraine, and some in the IMF, have argued those bonds should be considered private-sector debt. That would allow the IMF to move ahead with its bailout even if Kiev institutes a moratorium on payments and doesn’t honor its obligation due in December. Some outside economists say it would be difficult, if not impossible, for Ukraine to meet the fund’s debt-relief goal without including those bonds in the restructuring, raising questions about whether the IMF can continue to lend to the country.