Ukraine ‘cannot pay off debt to Russia’
“The government of Ukraine is imposing a moratorium on payment of the so-called Russian bond”, Ukrainian prime minister Arseniy Yatsenyuk said on Friday.
Ukraine’s gross foreign debt, which includes private external debt, amounted to $127 billion by July 1, which amounts up to 122.8 percent of the country’s GDP, National Bank of Ukraine data showed.
Putin also said Thursday Russia was not planning to impose sanctions against Ukraine after Moscow suspended its free trade agreement with Kyiv. The fact that Ukraine failed to pay back $3 billion plus $75 million of loan interest should be officially recognized upon expiry of a 10-day grace period after the payment deadline.
“We are prepared for court action from the Russian side”. More than 9,000 people have been killed in fighting in eastern Ukraine between Russian-backed separatists and Ukrainian troops since April 2014. We thank you in advance.
Cash-strapped Kyiv is in dire need of further global funding and was required by the IMF to restructure a total of $15.3bn of debt to unlock the next instalment of the $17.5bn aid package.
Yatsenyuk announced the payment freeze at a government meeting in Kyiv, contending the step was needed after Russian Federation refused to join the restructuring.
“Ukrainian colleagues have no chance to win this court battle”, Mr. Storchak said. Payments are frozen “until our propositions on restructuring are accepted or until a relevant court decision is made”, he said.
Officials in Kyiv argue that the loan is not a sovereign one granted by a state to another and is subject to terms agreed of an agreement with its other creditors, but Moscow says it can not be considered private debt and has refused such conditions.
Ukraine’s finance ministry sounded a more conciliatory note than Yatseniuk, saying in a statement: “Ukraine remains committed…to negotiating in good faith a consensual restructuring of the December 2015 Eurobonds”. “An out-of-court restructuring is possible, but the only way to negotiate is to negotiate directly”.
He said the IMF’s recent concerns about the Ukrainian parliament’s decision to reject a proposed budget for the next year and a new tax code could indicate a “growing risk that the country’s bailout could be put on hold”.
