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Opinion
Leonid Bershidsky

IMF's Leash Is Too Short for Ukraine

Private debt-restructuring conditions that the IMF has imposed on Ukraine may be too tough for the Kiev government to meet.
Ukraine's finance minister is looking for more support.

Ukraine's finance minister is looking for more support.

Photographer: Alex Wong/Getty Images

As Ukrainian Finance Minister Natalie Jaresko travels to Washington, New York and London to try to persuade her country's creditors to take a haircut, she comes with a math problem. The restructuring that Ukraine and the International Monetary Fund have agreed to doesn't really add up. Ukraine can't save $15.3 billion over the next four years unless its creditors forgive some of the principal they're owed -- yet none of them may be ready to do that. 

The IMF has agreed to lend Ukraine $17.5 billion over the next four years. This "debt operation" (a euphemism for a soft default) is supposed to save Ukraine $5.2 billion in debt payments this year and $3.4 billion, $4.4 billion and $2.3 billion in the next three years. According to the Ukrainian investment firm ICU, the government wants to include $20 billion of debt in the restructuring, at least half of which is scheduled for repayment over the next four years. That means that, over those four years, Ukraine would pay investors nothing.