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Russia will not back IMF aid program to Ukraine if it fails to consider debt requests

May 17, 2016, 13:53 UTC+3 MOSCOW

According to the Russian finance minister, Russia as a sovereign creditor will insist on including Ukraine’s obligations to Russia when working at the update of the IMF's aid program to the country

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© Alexandr Demyanchuk/TASS

MOSCOW, May 17. /TASS/. Russia will not support the aid program of the International Monetary Fund (IMF) to Ukraine if it does not take into consideration Ukrainian obligations to Russia regarding $3 bln debt, the Finance Minister Anton Siluanov said in an interview aired by the Rossiya-24 TV news channel Tuesday.

As a sovereign creditor Russia will insist on including Ukraine’s obligations to Russia when working at the update of the IMF's aid program to the country, he added.

"The [aid] program [to Ukraine - TASS], which is being worked out by the IMF now… hopefully the program will take into consideration Ukraine’s obligations on redemption of its debts to Russia. In case it does not how can we support the Fund’s program like that? That is absolutely not in line with our interests," he said.

According to Siluanov, Ukraine’s new government has not established a dialogue on the debt issue with Russia yet.

"We haven’t had a dialogue at the level of finance ministers, unfortunately. As a creditor we’ve offered terms of restructuring Ukraine’s $3 bln bond. We’ve made our proposals but Ukraine never responded to them," he said, adding that Moscow has not received "any appropriate proposals from the Ukrainian side.

There has been a "technical negotiation" where Ukraine offered restructuring terms worse than for commercial creditors, the minister said.

"It is absurd. It is obvious that we as a sovereign creditor can have better terms of restructuring than commercial creditors," he added.

In end-April Russia’s Finance Ministry confirmed that Russia had agreed to postpone the court hearing on its $3-bln debt claim to Ukraine. Russia decided to give the new Ukrainian government some time to prepare for and start honest debt payment negotiations with Russia.

Ukraine’s previous government set a moratorium on the payment of the state debt to Russia on December 18, 2015. The then Ukrainian Prime Minister Arseniy Yatsenyuk explained that the move had been prompted by Russia’s refusal to strike a debt restructuring deal with Ukraine on a par with private creditors. Meanwhile on the previous day, December 17, the executive board of the International Monetary Fund recognized Ukraine’s $3 billion debt to Russia as official and sovereign, which means that a sovereign borrower is under obligation to pay off the debt.

In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovych, agreed that Moscow would issue a $15-billion credit to Kiev by offering Ukrainian securities. Under the program, bonds worth $3 billion were placed at the Irish Stock Exchange on December 20, 2013. Russia repurchased them by using the money from the National Welfare Fund.

On December 20, 2015, Ukraine exceeded the time limit for paying off its debt to Russia. The Russian Finance Ministry filed a lawsuit against Ukraine to London’s High Court of Justice.

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