Ukraine imposes moratorium on debt payments to Russian Federation
The new Ukrainian government has said it would not repay the bond in full, and has encouraged Moscow to sign on to a deal reached with Kyiv’s private creditors in August.
The suspension would stay in place “until the acceptance of our restructuring proposals or the adoption of the relevant court decision”, Yatsenyuk said.
President Vladimir Putin said he will protect Russians living in southeastern Ukraine from what he described as being “eaten up” by Ukrainian “nationalists”, according to an interview broadcast Sunday.
The fund meanwhile expressed concerns Friday over parliament’s rejection this week of a draft budget for next year and a new tax code, saying that a balanced budget is a “key condition” for funding and deviating from it would “inevitably disrupt the associated global financing”.
“From today we are halting payments on this debt”, he said.
Ukraine has insisted that the loan, coming from a Russian state rainy day fund, should be considered private and therefore not be part of the IMF rules that require Kyiv to make good on its sovereign debt as part of its IMF bailout package.
The government in Kyiv has also sought to give a political dimension to the debt, hinting that Russian Federation bought Ukrainian bonds in December 2013 in a clandestine bribe of then-President Viktor Yanukovych, who was facing massive anti-government protests at the time.
Ukraine has included the two-year bond in the external commercial debt it is restructuring to shore up its war-torn economy.
On Aug. 27, a group of the country’s largest creditors, including investment firm Franklin Templeton, which owns around half of the country’s outstanding debt, accepted a 20 percent write-off on $18 billion in outstanding bonds.
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.
The default “is just confirmation of the unimproved relations between the countries”, said Simon Quijano-Evans, the London-based chief emerging-market strategist at Commerzbank.
Putin past year acknowledged that Russian troops were in Crimea before Moscow seized the Black Sea peninsula from Ukraine, after initially denying it.