Ukraine not to repay Russia debt
The Ukrainian government says it can not pay off its $3 billion debt to Russian Federation without violating its debt-restructuring deal with other global creditors.
“The government is imposing a moratorium on the payment of $ 507 million by two Ukrainian companies – Yuzhnoye and Ukravtodor – to Russian banks”.
The development isn’t likely to threaten a bailout from the International Monetary Fund, which recently adjusted its lending policy to allow participating countries to continue receiving funds even if they are behind on repayments to sovereign lenders.
Cash-strapped Kyiv is in dire need of further global funding and was required by the IMF to restructure a total of $15.3bn of debt to unlock the next instalment of the $17.5bn aid package.
“From now on, the payments on the debts totaling 3.582 billion US dollars to the Russian side will be stopped until the moment, when our restructuring proposal is accepted or the court takes a relevant decision”, Yatsenyuk told a cabinet meeting. December 20 is the deadline for Ukraine to pay the debt, which is followed by a 10-day grace period.
More than 9,000 people were killed in fighting between Russia-backed separatist rebels and Kyiv troops in east Ukraine since April 2014, and the European Union blames Moscow for driving the revolt.
In November, Russian President Vladimir Putin proposed a debt restructuring, saying Moscow would be willing to agree to payments of $1 billion a years between 2016 and 2018. “Under the terms of the new Ukrainian bonds issued on Nov.12, in the debt exchange, Ukraine is prohibited from paying holdout creditors in accordance with the original contractual terms”, the statement added.
Kyiv has been trying to give a political dimension to the debt, suggesting that Moscow bought Ukrainian bonds in December 2013 in what it calls an act of bribery by the then president, a close ally of Russian Federation.