LONDON, United Kingdom. Arseniy Yatsenyuk, the Ukrainian prime minister, has said his country will not repay a $3bn (£2bn) debt owed to Russia by this weekend after Moscow refused to accept repayment terms already offered to other international creditors.
The moratorium on outstanding debt repayments to Russia effectively means that Ukraine is defaulting on the $3bn debt due on Sunday.
“After Russia refused to accept our offer despite our attempts to reach a restructuring deal, the government is imposing a moratorium on the repayment of the $3bn debt to Russia,” Yatsenyuk said at a televised government session.
He did not indicate when Ukraine would be ready to repay the debt. Moscow has said it will take Ukraine to court if it fails to pay on time.
The moratorium would be in place “until the acceptance of our restructuring proposals or the adoption of the relevant court decision … We are prepared for court action from the Russian side,” Yatsenyuk said.
Ukraine’s economy has struggled over the past few years and the country has negotiated repayment terms with creditors, but not with Russia. In November, the Russian president, Vladimir Putin, proposed a debt restructuring saying Moscow would be willing to agree to payments of $1bn a year between 2016 and 2018.
Ukraine turned down the offer, saying it cannot legally offer Russia a better deal than the one it has negotiated with other debt holders. That deal has seen countries accept a 20% write-down of their Ukrainian bond holdings, a move which has cut Ukraine’s sovereign debt from $19bn to $15.5bn.
It is the latest spat between the two neighbours following a run of gas supply disputes and Russia’s annexation of the Crimean peninsula in March 2014 and subsequent support for separatist rebels in eastern Ukraine. Ukrainian leaders have accused Moscow of sending troops and weapons to the east, a claim the Kremlin has vehemently denied.
Kiev has sought to give a political dimension to the debt, hinting that Russia bought Ukrainian bonds in December 2013 in an act of clandestine bribery of the then president, Viktor Yanukovych, who was facing severe anti-government protests at the time.
Credit: The Guardian (UK)
