Ukraine halts $3bn Russian Federation debt repayment
“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.
“The government is imposing a moratorium on the payment of $507 million by two Ukrainian companies – Yuzhnoye and Ukravtodor – to Russian banks”.
The IMF has taken Russia’s side and recognized Ukraine’s debt as sovereign, meaning Kyiv would have to declare default if unable to pay.
“We never said that there aren’t people there dealing with certain issues, including in the realm of the military”, Putin said during his annual news conference in Moscow.
On Wednesday, Russia said it would suspend a trade pact with Ukraine that would exclude the country from a free trade zone that includes former Soviet countries from 1 January.
Putin also said Thursday Russia was not planning to impose sanctions against Ukraine after Moscow suspended its free trade agreement with Kyiv.
Ukrainian Finance Minister Nataliya Yaresko said late Friday she hoped the dispute could still be resolved but Kremlin spokesman Dmitry Peskov discounted that possibility, saying “there is only the court prospect”.
William Jackson, an emerging markets analyst at Capital Economics, said the implications of the moratorium were unclear.
The decision came after an European Union summit in Brussels where Italian Prime Minister Matteo Renzi wanted to discuss the sanctions, imposed on Moscow previous year over the Ukraine conflict, before extending them.
In August, the Ukrainian cabinet and a group of its other worldwide creditors have reached an agreement, which envisages a 20-percent write-off of 15 billion USA dollars of Kyiv’s foreign debts and a 4-year extension of the loan repayment period.
Western governments accuse Russian Federation of providing fighters and weapons to the separatists, but Moscow has long denied the accusations and claimed all of its citizens fighting alongside the rebels are independent “volunteers”.
Ukraine is still required to negotiate in good faith on a restructuring, according to International Monetary Fund rules.