Ukraine Imposes Moratorium on Repaying $3 bln Russian Bond
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.
Russian President Vladimir Putin last week ordered his government to sue Ukraine if it defaults on the bond, after Moscow said that Kyiv has rejected its offers of debt restructuring.
The suspension would stay in place “until the acceptance of our restructuring proposals or the adoption of the relevant court decision”, Yatsenyuk said.
Peskov said Putin was referring to Russian volunteers that had joined pro-Kremlin rebels in their fight against government troops in eastern Ukraine.
“The due date for settling $3 billion and the coupon is December 20, Sunday, thus the payment should be made on the following business day – which is Monday, December 21”, the minister said.
However, Ukraine’s decision may become problematic to the International Monetary Fund, a major lender to the country, which is technically not allowed to lend to countries in default to other nations.
“I remind you that Ukraine has agreed to restructure its debt obligations with responsible creditors, who accepted the terms of the Ukrainian side”.
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. But Russia argued the debt was sovereign, despite its unusual Eurobond form, and proposed its own repayment terms.
“Our Ukrainian colleagues have no chance of winning this case”, Russian Deputy Finance Minister Sergey Storchak told state television on Friday.
William Jackson, an emerging markets analyst at Capital Economics, said the implications of the moratorium were unclear.
The dispute over the budget and tax code has already delayed the disbursal of the latest loan tranche of about $2 billion, as Ukraine battles recession amid the conflict against Russia-backed separatists in the east.
Kyiv claims Moscow has refused to discuss restructuring proposals.