Kenneth Rapoza, Forbes: Super-Duper Junk Credit Aside, IMF Won't Stop Bailing Out Ukraine
Triple C rated Ukraine will keep the love of the International Monetary Fund even as bond lords fret over whether or not they’ll ever see a dime for lending to them.
IMF chief Christine Lagarde said in an open letter to the financial community on Friday that the the bailout fund was standing by. Lagarde said that the National Bank of Ukraine (NBU) cannot be counted on to use its reserves to pay for interest on bonds. Most emerging markets keep foreign reserves in order to lower credit risk. Lenders often use reserves as a gauge to a government’s ability to service its debt.
“The NBU’s international reserves cannot be used for sovereign debt service without the government incurring new debt,” she said in a statement to the market. “Ukraine’s debt repayment capacity is limited by its fiscal capacity. Since Ukraine lacks the resources under the program to fully service its debts…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.”
WNU Editor: Talk about throwing good money at a hopeless situation ... and talking about double standards. The IMF wants serious proposals from Greece to solve their debt problems before they get a dime .... but for Ukraine .... the "piggy-bank" is open to a government that seriously need reforms on every level starting with the removal of the bloated bureaucracy and the corruption that is endemic on every level.
2 comments:
They are running out of money. They had to make a decision between Greece and the Ukraine. Ukraine was deemed much more important. Therefore, rules what rules? Adios Greece, of coarse Greece by it's own actions made this decision easier, but it doesn't change the fact this was a naked political/power calculation.
So true James .... and the sad part of it is that I do not see this IMF money being done to help the situation at all .... it is just money that will be used to fuel a losing war.
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