Ukraine Declines To Pay $3 Billion Debt To Russia: PM Arseniy Yatsenyuk
“From today we are halting payments on this debt”, he said, essentially confirming that Kyiv will default on the bond when the Sunday payment deadline arrives.
Yatsenyuk also said Ukraine would cancel payments on $507 million of Ukrainian commercial debt held by Russian banks.
According to Siluanov, Russia will appeal to a court to recover the debt, should Ukraine fail to pay it within the grace period until December 31.
They are among the most controversial steps taken to influence Moscow’s course in Ukraine, having inflicted economic pain both on Russian Federation and the 28-country EU.
“After Russia refused to accept our offer, despite our attempts to reach a restructuring deal, the government is imposing a moratorium on the repayment of the $3 billion debt to Russia”, Yatsenyuk said at a televised government session.
Ukraine has insisted that the loan should be considered private and should, therefore, be exempt from the International Monetary Fund’s rules that require Kyiv to make good on its sovereign debt as part of its IMF bailout package, which the country desperately needs to overhaul its struggling economy.
The Russian leader has for the first time admitted that Russian troops were active in eastern Ukraine during the separatist conflict.
The issue has caused a crisis in Crimea and has worsened Ukrainian-Russian tensions. But, separately, the Washington-based lender criticized Ukraine’s parliament Friday, accusing it of all but scuttling a tax-overhaul plan needed to unlock much-needed IMF funds.
Kyiv’s move to impose a ban on debt repayments came as a total surprise as on Thursday the country’s Finance Ministry said it was committed to a dialogue with Moscow over a possible credit relief deal.
Ukraine’s restructured dollar-denominated bonds stayed lower, with the yield on the debt due 2025 rising two basis points to 9.65pc by 12:05pm in Kyiv. “But it’s not hard to envisage any debt talks breaking down”, he said.