IMF says could lend to Ukraine even if it can't service its debts

WASHINGTON (Reuters) - The head of the International Monetary Fund said on Friday that the global lender could continue to lend to Ukraine even if talks over restructuring Kiev's debt fail and the nation determines it cannot meet its obligations.

Kiev is at loggerheads with its creditors in talks to restructure the country's sovereign debt. Finance Minister Natalia Yaresko said on Wednesday the government could call a moratorium on debt payments.

"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 consistent with its Lending-into-Arrears Policy," IMF Managing Director Christine Lagarde said.

During a visit to Washington this week, Yaresko said she expects the IMF to release a $1.7 billion (1 billion pounds) tranche of aid to Kiev in July.

(Reporting by Timothy Ahmann and Jason Lange; Editing by Sandra Maler and Alan Crosby)