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Ukraine’s law allowing foreign debt moratorium comes into force

June 02, 2015, 12:48 UTC+3 KIEV
Kiev insists that Ukrainian Eurobonds worth $3 billion and purchased by Russia are also referred to the category of private loans and the law on the foreign debt moratorium should apply to them
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Ukrainian president Petro Poroshenko

Ukrainian president Petro Poroshenko

© ITAR-TASS/Maxim Nikitin

KIEV, June 2. /TASS/. Ukraine’s law allowing the government to declare a moratorium on foreign debt repayment came into force on Tuesday.

The law entitled "On the Specifics of Conducting Transactions with State, State-Guaranteed and Local Debt" and passed by Ukraine’s parliament last week allows the government to suspend foreign debt payment to private investors.

Kiev insists that Ukrainian Eurobonds worth $3 billion and purchased by Russia in 2013 are also referred to the category of private loans and the law on the foreign debt moratorium should apply to them.

Moscow, however, has said the loan cannot be considered as private and must be repaid within the scheduled term.

Ukrainian Prime Minister Arseniy Yatsenyuk who presented the law on the foreign debt moratorium in parliament said this legislation applied "exclusively to private creditors, the holders of Ukraine’s debt obligations."

The Ukrainian government has said it needs this possibility to protect state assets and people from "dishonest creditors."

However, experts have said the law is the first step towards Ukraine’s default on its liabilities.

Ukraine’s external debt hit $72.9 billion as of late 2014 while its internal debt stood at $29 billion and its gold and foreign currency reserves were less than $10 billion.

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