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Russia sorry Ukraine prefers default to talks - finance minister

December 19, 2015, 12:42 UTC+3

The finance minister also said Ukraine's announced moratorium does not cancel its obligations to settle the debt

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Russia’s Finance Minister Anton Siluanov

Russia’s Finance Minister Anton Siluanov

© Anna Isakova/Russian State Duma Press Office/TASS

MOSCOW, December 19. /TASS/. Russia regrets Ukraine has preferred default to talks, Russia's Finance Minister Anton Siluanov said commenting on Kiev's announcing of moratorium on settling the outstanding debt to Russia.

"Russia acknowledges yesterday's decision of Kiev to announce a moratorium to settle the debt to Russia," he said. "We are sorry Ukraine decided to announce default instead of having talks on the suggestion, the Russian president voiced at the G20 summit in Antalya in November this year."

At the G20 summit in Turkey, Vladimir Putin said Moscow suggested extending term of the Ukrainian debt for 2016-2018, where $1 billion is payable annually. The president said Russia was not simply agreeing to restructure the Ukrainian debt, but offered conditions better than those requested by IMF.

The finance minister also said Ukraine's announced moratorium does not cancel its obligations to settle the debt.

"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. "Ukraine's announced moratorium does not cancel its obligations to settle the debt. The obligations remain in force, and the Russian Federation expects they will be observed fully."

Russia will file a suit if Ukraine fails to settle $3 billion before December 31, the minister said.

"IMF has confirmed the debt is official, but Ukraine has not made any suggestions, which could be based on acknowledging of the debt's official status. If Ukraine does not settle the due sum within the beneficial term to December 31, Russia will file a suit to recover the debt," he said.

The Ukrainian government has also imposed a moratorium on paying 507 million U.S. dollars, which two Ukrainian companies are owing to Russian banks.

For his part, Russian Deputy Finance Minister Sergei Storchak said that Ukraine had no chance to win a trial vs. Russia over the 3-billion-dollar credit.

"When the fact of non-payment is easily established by a British court, it will mean a very quick and concrete procedure of making the final decision. In this sense, the Ukrainian colleagues, who are potential litigators, stand no chance to win the trial," Storchak explained.

In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovich, agreed that Moscow would issue a 15-billion-dollar credit to Kiev by placing Ukrainian securities. Under that agreement, Ukraine placed its securities worth 3 billion U.S. dollars at the Irish Stock Exchange on December 20, 2013. Russia used the money from its National Welfare Fund to purchase the securities.

Later, Ukraine tried to argue the loan’s status and equalize it to a commercial credit subject to restructuring. Russia disagreed with that approach.

In November 2015, Russian President Vladimir Putin said Russia was ready to restructure Ukraine’s debt in case the United States, the European Union or a major international financial institution provided guarantees to Russia. No guarantees have been received.

On December 17, the International Monetary Fund (IMF) confirmed the official status of Ukraine’s 3-billion-dollar debt to Russia.

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