Ukraine can’t use reserves to pay creditors

IMF chief Christine Lagarde said on Friday that Ukraine cannot use its central bank reserves to pay creditors, rebuffing a suggestion by bondholders that it do so.

The reserves of the National Bank of Ukraine “cannot be used for sovereign debt service without the government incurring new debt,” which runs against the aims of the IMF bailout program for the troubled country, Lagarde said. Lagarde insisted that the country’s private creditors need to move ahead with negotiations on cutting the country’s debt burden, as envisaged in the $40 billion bailout programme set in March.