Yatsenyuk announces moratorium on repayment to Russian Federation
Moscow and Kyiv have been locked in a bitter showdown over a Russian $3 billion loan granted to the pro-Moscow regime of ex-president Viktor Yanukovych in December 2013, not long before he was ousted and fled to Russia.
Some diplomats in Brussels said this might be the last time economic sanctions get rolled over in their entirety as France and other members have sought to reengage with Moscow on countering terrorism and seeking an end to the war in Syria.
In a statement Thursday, the Ukrainian finance ministry said it was forbidden from repaying the Russian bond under the terms of its August debt restructuring.
“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.
Heated debates at the Verkhovna Rada in Kyiv have in the past spilled over into scuffles.
Cash-strapped Kyiv is in dire need of further global funding and was required by the IMF to restructure a total of 15.3 billion of debt to unlock the next installment of the 17.5 billion aid package. Emerging markets have been hit this year as capital moved out ahead of an expected increase in USA interest rates.
“According to a recent decision, the International Monetary Fund can continue to lend to countries in arrears to official creditors “subject to the debtor’s good faith efforts” to reach a deal”.
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.
Ukraine, its finances reeling from a two-year-old conflict with Russian-backed separatists in the east of the country, had pushed Russia to join a $18 billion restructuring with commercial creditors this year.
“Approval of a budget that deviates from program objectives for 2016 and the medium term will interrupt the program and inevitably disrupt the associated global financing”.
This week, Nato’s top civilian official renewed calls for Russian Federation to remove troops from eastern Ukraine, citing Putin’s recent admission that it had military advisers in the region. President Petro Poroshenko described the Russian bond as a “bribe” earlier this year, rejecting Putin’s demands for repayment.