Ukraine has imposed a moratorium on the $3 billion Russian debt repayment, said the country’s Prime Minister Arseny Yatsenyuk at a cabinet meeting on Friday. The announcement comes ahead of the December 20 deadline for the debt repayment.
"Considering that Russia has refused, despite our efforts, to sign an agreement on restructuring and to accept our proposals, the cabinet is imposing a moratorium on payment of the Russian debt worth $3 billion," said Yatsenyuk.
The payment is halted "until we make restructuring proposals or a relevant court decision is made," added the Prime Minister.
Late on Thursday, Ukraine's Ministry of Finance said Kiev couldn’t pay off Russia’s $3 billion Eurobond loan without breaking a debt restructuring deal reached with other international creditors.
The country “remains committed to negotiating in good faith” with Moscow over debt restructuring, said the ministry in a statement.
In August, Ukraine agreed a restructuring deal with a creditor committee led by Franklin Templeton (which owns about $7 billion of Ukrainian bonds) providing a 20 percent write-down on about $18 billion worth of Eurobonds.
Russia refused to participate in the debt restructuring, claiming its bond purchase was a commercial not a state loan.
According to Yatsenyuk, Ukraine has also halted debt repayments by state-owned companies to Russian banks.
“The government is imposing a moratorium on the $507 million debt payment to Russian banks of two Ukrainian companies Yuzhnoe and Ukravtodor. From today all payments are suspended till our [government – Ed.] or a court makes a decision,” Yatsenyuk said.
In November, Russian President Vladimir Putin offered a three-year restructuring plan for Kiev’s debt, provided loan guarantees were in place from the US, the EU and the International Monetary Fund. Under the offer, Russia would forgo payment this year and Kiev would pay $1 billion a year for the next three years.
The deal fell through after Ukraine's Western backers were unwilling to provide such guarantees.