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Kremlin warns Ukraine will default unless Kiev repays debt to Russia

December 08, 2015, 12:50 UTC+3 MOSCOW
Vladimir Putin's press secretary said Kiev didn't accept Russia's restructuring option
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© Alexandr Demyanchuk/TASS

MOSCOW, December 8. /TASS/. The Kremlin has warned that Ukraine will default unless it repays its debt to Russia.

"A default situation lies ahead (for Ukraine), just what we were speaking about," Kremlin spokesman Dmitry Peskov said on Tuesday.

"Russia offered a [debt] restructuring option as [Russian President Vladimir] Putin put forward the initiative in Antalya [at G20 summit]," Peskov said, adding that "unfortunately, our counterparts did not accept the initiative."

"The Russian Federation has no other proposals thus, under all norms of financial international relations, (Ukraine) nears default as this is a sovereign debt," spokesman said.

In mid-November President Putin said that Russia had offered Ukraine to repay its $3 bln debt by $1 bln annual installments in 2016-2018. Putin stressed that Russia offered not only a restructuring but also better terms compared with those asked by the International Monetary Fund (IMF). Russia had asked for guarantees on Ukraine’s debt from either the government of the United States or from the European Union, or from one of international financial institutions.

Later Deputy Finance Minister Sergey Storchak said Russia expected the IMF and Ukraine’s creditors to respond before December 8, 2015.

Last week Russia’s Finance Ministry received an official refusal from the US government to provide guarantees on Ukraine’s debt. The Ministry also said Moscow will bring legal proceedings against Ukraine in case Kiev fails to repay $3 bln by December 20 this year, which will mean the country’s sovereign default.

In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovych, agreed that Moscow would grant Kiev a credit worth $15 bln through the placement of Ukrainian securities. Under the program bonds for 3 bln dollars were placed on the Irish Stock Exchange on December 20, 2013. Russia purchased the bonds using the funds from its National Welfare Fund.

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