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Russian ex-finance minister sees risks in extending Russia loans to Ukraine

January 13, 2014, 22:30 UTC+3 MOSCOW
Kudrin pointed out that the term for the debt securities recoupment is brief
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© Itar-Tass

MOSCOW, January 13, /ITAR-TASS/. Russian ex-finance minister and head of the Civic Initiative Committee Aleksey Kudrin sees the risks in extending Russia’s loans to Ukraine.

In an interview with Itar-Tass he noted that Ukraine’s debt securities in which Russia plans to invest 15 billion dollars from the National Wealth Fund are much less reliable and profitable than other foreign assets. “In this sense, this means the worsening of our portfolio of funds’ placement,” Kudrin said.

Kudrin pointed out that the term for the debt securities recoupment is brief. “Ukraine’s situation will not improve much in three years,” he said. “The matter of repaying the debt will present itself. Russia can extend the term, or buy more debt securities or refinance them. The question arises when Ukraine starts repaying the debt. What can it do? There must be certain reforms to enlist resources towards repaying the debt,” Kudrin noted.

He believes it is a drawback of the deal that Russia does not lay down any conditions to Ukraine for reform or sources for repaying indebtedness. “Most probably, they were determined politically in this situation. The matter was put off. Ukraine will be asked in three years whether it returns the money or agrees to steps connected with trade interaction on conditions of advantage to Russia,” the ex-minister noted.

Kudrin added that unless Ukraine makes reforms, it will have more difficulties repaying the debt and so will have to meet Russia halfway and give it some privileges. “This will be a certain lever of influence on Ukraine,” the ex-minister believes.

Meanwhile Kudrin, on the whole, supports the decision on financial backing of Ukraine. “I believe these are justifiable measures in view of the problem of Ukraine’s association agreement with the EU,” he said. Kudrin noted that these measures give a pause to search for mutually advantageous decision for the EU, Ukraine and Russia, for a better considered transition or combining the regimes of trade zones of the three parties. “It takes time to arrive at such a decision. Therefore I am all for trilateral talks,” Kudrin said.

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