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Ukraine’s president signs law on indefinite moratorium on debt payment to Russia

May 04, 2016, 17:05 UTC+3 KIEV

The Ukrainian parliament passed a law on April 12 to impose an indefinite moratorium on the payment of Ukraine’s external debt, including the $3 billion loan raised from Russia

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Ukrainian President Petro Poroshenko

Ukrainian President Petro Poroshenko

© Mikhail Palinchak/Ukrainian president's press service/TASS

KIEV, May 4. /TASS/. Ukrainian President Petro Poroshenko has signed a law on lifting the time limits of a moratorium on paying off Ukraine’s external government debt, including the $3 billion owed to Russia, according to information posted on the Ukrainian parliament’s website on Wednesday.

"It [the law] has been returned with the president’s signature," the Verkhovna Rada’s website said.

The website indicates April 29, 2016 as the date of the Ukrainian president’s signature.

The Verkhovna Rada passed a law on April 12 to impose an indefinite moratorium on the payment of Ukraine’s external debt, including the $3 billion loan raised from Russia.

The existing ban on the payment of Ukraine’s external government debt would have expired on July 1, if the national parliament had not adopted the law on the indefinite moratorium.

According to the authors of the document, the cancellation of the moratorium’s final date "will extend the term of legal grounds for searching for further ways of restructuring external debt obligations."

In the opinion of Opposition Bloc representatives, the bill means Ukraine’s default. According to deputy Mikhail Papiyev, the Ukrainian legislation should necessarily stipulate a final date of the moratorium on the government debt payment.

Former Ukrainian Prime Minister Arseniy Yatsenyuk said earlier that Ukraine was due to pay $30 billion in external debt over four years, including the $3 billion owed to Russia.

However, the Ukrainian government imposed a moratorium on December 18, 2015 on the debt payment to Russia. Yatsenyuk said at the time the decision had been made, following Russia’s refusal to sign an agreement on debt restructuring on a par with private creditors.

Meanwhile, the IMF Board of Governors made a decision on December 17, a day before the Ukrainian debt moratorium, that Ukraine’s liabilities to Russia were its sovereign debt and, therefore, Ukraine as the borrower state was responsible for the loan repayment.

Russian and Ukrainian Presidents Vladimir Putin and Viktor Yanukovych agreed in December 2013 that Moscow would give Kiev a $15 billion loan through the purchase of Ukrainian Eurobonds.

As part of this program, Ukraine placed bonds worth $3 billion on the Irish Stock Exchange on December 20, 2013 and Russia purchased them, using the money of its National Welfare Fund.

Russia subsequently decided against investing the other $12 billion in Ukraine’s bonds after a change of power in the ex-Soviet republic.

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