Ukraine imposes moratorium on payment of Russian debt
The moratorium means that Ukraine is likely to default on the debt, which is due on Sunday.
Ukrainian Prime Minister Arseny Yatseniuk said on Friday Ukraine had imposed a moratorium on the payment of a $3 billion Eurobond held entirely by Russia that matures on December 20 and on $507 million of Ukrainian commercial debt held by Russian banks.
Yatsenyuk announced at a televised government session a “moratorium” on any debt repayments to Russian Federation. Payments are frozen “until our propositions on restructuring are accepted or until a relevant court decision is made”, he said.
In November, Russian President Vladimir Putin offered a three-year restructuring plan for Kyiv’s debt, provided loan guarantees were in place from the USA, the European Union and the International Monetary Fund. Under the offer, Russia would forgo payment this year and Kyiv would pay $1 billion a year for the next three years.
Putin also said Thursday Russia was not planning to impose sanctions against Ukraine after Moscow suspended its free trade agreement with Kyiv.
But during his annual news conference on Thursday, Putin conceded there were “people involved in solving certain issues, including in the military sphere” in eastern Ukraine. “The people who go there had in their time expressed their solidarity with Donbass and considered it inappropriate to put up with the fact that Ukrainian military forces started to destroy settlements in southeast Ukraine”, Peskov said.
The Ukrainian leadership has also watched warily as developments in Syria and the refugee crisis have forced Europe to consider Putin as an ally, downgrading concerns over Crimea and the simmering tensions in Donetsk and other eastern regions. “And in this case problems will emerge for many creditors who gave money to Ukraine and continue to do it”.
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.
The IMF this week agreed with Moscow that the bond consists of an official loan.