OREANDA-NEWS.  On December 16, 2015, the Executive Board of the International Monetary Fund (IMF) decided that the claim arising from the US$3 billion Eurobond issued by Ukraine on December 24, 2013 and held by Russia’s National Wealth Fund (NWF) is an official claim for the purposes of the Fund’s policy on arrears to official bilateral creditors. At the request of the Executive Director for the Russian Federation, the Board considered the staff paper and endorsed the staff assessment without a meeting.1 Ukraine is not currently in arrears to its official creditors.

Executive Board Assessment

In the case of the Eurobond, the Russian authorities have represented that this claim is official. The information available regarding the history of the claim supports this representation. The bond was acquired by Russia’s NWF pursuant to a decision by the Russian Government to provide assistance to Ukraine. In public statements at the time the bond was issued, Russia’s Finance Minister, Mr. Siluanov, explained that assistance was being provided via the NWF because the funds had not been appropriated in the federal budget, ruling out a direct intergovernmental credit. Since the NWF’s investment guidelines did not permit investment in Ukrainian bonds (due to the credit rating requirements), a specific government decision was needed to amend them. This implies that the NWF, in acquiring the Eurobond, was acting on behalf of the government. Subsequently the Russian authorities confirmed to Euroclear, at the request of the Ukrainian authorities, that the Eurobond has at all times been 100 percent owned by the Russian Government.

Based on the foregoing considerations, staff is of the view that the Eurobond is an official claim for the purposes of the Fund’s policy on arrears to official bilateral creditors. In particular, the Eurobond (i) is held by the NWF, an agency acting on behalf of the Russian Government; and (ii) originates from a transaction where the NWF acted on behalf of the Russian Government to provide financing to Ukraine.