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Kiev imposes moratorium on payment of Russian debt — PM Yansenyuk

December 18, 2015, 14:03 UTC+3
Arseniy Yatsenyuk says the decision was made considering that Russia had refused to sign an agreement in the restructuring and to accept Ukraine's proposals
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© AP Photo/Sergei Chuzavkov

KIEV, December 18. /TASS/. Ukraine’s Cabinet has imposed moratorium on payment of the Russian debt, Prime Minister Arseniy Yansenyuk said at a cabinet meeting on Friday.

"Considering that Russia has refused, despite of our efforts, to sign an agreement in the restructuring and to accept our proposals, the cabinet is imposing moratorium on payment of the Russian debt worth $3 bln," he said.

Also, the Ukrainian government has imposed a moratorium on the payment of $507 million by two Ukrainian companies to Russian banks.

"The government is imposing a moratorium on the payment of $ 507 million by two Ukrainian companies — Yuzhnoye and Ukravtodor — to Russian banks. From today, all payments shall be suspended until the adoption of our proposals or a court decision," Ukraine's prime minister said.

Ukraine's debt to Russia

In December 2013, Russian President Vladimir Putin and the then Ukrainian President Viktor Yanukovych reached an agreement that Moscow would extend a $15 billion loan to Kiev through placing Ukrainian securities. Under the deal, $3 bln worth of bonds were listed on the Irish Stock Exchange on December 20, 2013 and bought by Russia from its National Welfare Fund.

Later on, Ukraine tried to challenge the loan’s status and reduce it to that of commercial credits subject to restructuring. Russia objected to this approach. However its suggestion that this loan be restructured under reliable Western guarantees was ignored.

In November 2015, Putin said Russia was ready to restructure Ukraine’s debt in case the United States, the European Union or any big international financial institute gave its guarantees to Russia. No guarantees have been issued.

Now, Moscow warns that in case Kiev fails to repay its debt in due time, i.e. by the end of the outgoing year, it will go to law.

Meanwhile, the International Monetary Fund on December 8 lifted the ban on crediting countries with overdue sovereign debts. Russia voted against this decision, saying it is politicized. As a matter of fact, this step means that the IMF can continue the implementation of its anti-crisis program for Ukraine even in the event Kiev falls into arrears with repayment of its debts to Russia.

The deadline for repayment of the Ukrainian debt is December 20. In the event it fails to do that, Russia will go to law ten days after that date.

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