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Russian minister estimates chances of positive verdict on Ukrainian debt close to 100%

December 22, 2015, 12:15 UTC+3 MOSCOW
On Monday, December 21, Ukraine failed to make a payment on the Russian loan of $3 bln
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Russian Economic Development Minister Alexey Ulyukayev

Russian Economic Development Minister Alexey Ulyukayev

© Sergei Savostianov/TASS

MOSCOW, December 22. /TASS/. Economic Development Minister Alexey Ulyukayev said that the chances of the Russian Federation for a positive judgment on the Ukrainian debt are close to 100%.

"I think that the legal situation is in our favor, our position is legitimate, and the IMF has recently confirmed that it is a sovereign debt ... So I think that our chances to achieve a positive judgment are close to 100%," he said in an interview with Rossiya 24 TV channel on Tuesday.

On Monday, December 21, Ukraine failed to make a payment on the Russian loan of $3 bln. "It means Ukraine has preferred a default on its debt liabilities to talks on an offer made by the Russian president at a meeting of the Group of Twenty leaders in Turkey’s Antalya in November 2015," the Russian Finance Ministry said.

The deadline for redemption of bonds worth $3 bln was on Sunday, December 20, 2015, which means that the corresponding payment was due to be made on the following working day, i.e. December 21, 2015. In formal terms, default on bonded obligations will be announced if Ukraine fails to make a corresponding payment within the so-called grace period, which expires on December 31, 2015. The Russian finance ministry expects Ukraine to fulfil its debt liabilities completely by that date.

Earlier, the IMF board recognized bonds worth $3 bln held by Russia as an official loan but Ukraine has made no offer based on the status of these bonds and has made no payment against its unconditional liabilities, the ministry said.

"If Ukraine fails to repay its debt fully within the grace period, Russia will use corresponding legal mechanisms to have this money repaid," the ministry said.

In December 2013, Russian President Vladimir Putin and the then Ukrainian President Viktor Yanukovych reached an agreement that Moscow would extend a $15 bln 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.

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.

However, on December 17, the International Monetary Fund confirmed the official status of Ukraine’s debt to Russia.

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