Brazil’s representative at the International Monetary Fund cautioned the lender against easing its standards to enable a large loan to Ukraine under pressure from the U.S. and Europe.
“The institution will suffer a loss of credibility if it were to bend, or worse, break, its rules to meet the urgencies of a member country or the foreign policy agenda of some of its main shareholders,” Paulo Nogueira Batista, one of 24 IMF executive directors, wrote in an op-ed published on the O Globo newspaper’s website.
An IMF team is in Kiev assessing the country’s economic needs ahead of a potential loan that officials in the U.S. and the European Union want to see sealed before disbursing their own aid. The Washington-based fund, which in the past six years made two loans to Ukraine that it stopped disbursing because policies were not being implemented, today said it was “impressed” by the interim government’s commitment.
Already racing to seal a bailout, Ukraine is struggling to keep hold of Crimea after pro-Russian forces seized control of it in the wake of Moscow-backed Viktor Yanukovych’s ouster as president. The standoff over the peninsula, once part of Russia and home to its Black Sea Fleet, prompted Western governments to hit President Vladimir Putin with sanctions as the crisis rekindles memories of the Cold War and rattles markets.
Nogueira Batista, who urged the fund to craft “a solid program” for Ukraine, said there was a risk the rules would be bent as the U.S. and EU publicly say they want the fund to mobilize a large sum to help the former Soviet republic.
“However, the allocation of resources to the IMF currently does not only come from the Americans and Europeans, but also largely from emerging markets, including Brazil,” he wrote. “It is not advisable to treat this matter as a function only of opinions expressed by Americans and Europeans.”
Brazil, Russia, India and China, the so-called BRIC countries, contributed to a boost in IMF emergency lending resources both during the global financial crisis and in 2012, when the U.S. didn’t participate.
A bridge loan under the IMF’s Rapid Financing Instrument could help the country wait until a more complete IMF program is agreed upon, he said. The facility, available for nations facing shocks, is capped at about $1 billion for Ukraine under current rules.
Nogueira Batista, who represents Brazil and 10 other countries at IMF board, is the most vocal of the fund’s executive directors. He has been critical of the fund’s Greek loan and of the IMF’s work on capital controls.