Ukraine refuses to repay debts

27.07.2016

Kiev has refused to repay the 3 billion USD loan from Russia it received in 2013

 

 

 

 

Ukraine’s Position

The official point of view on the issue has been stated by Minister of Finance of Ukraine Alexander Danyluk, who said that Kiev sees no reason to return the debt, and therefore will not.

Backstory

After the coup in February 2014, the new government insisted on recognizing the debt as commercial, but Russia demanded that it be recognized as state debt and not be subject to restructuring. Late last year, the International Monetary Fund recognized the official status of the Russian loan, but the Cabinet of Ministers of Ukraine imposed a moratorium on debt repayments.

In February, Russia demanded through the High Court in London that Kiev repay the debt in the amount of $3 billion, after which Ukraine filed its objections.

The Law Debenture Trust Corporation p.l.c., which represents the interests of the Russian Federation in the case on Ukraine’s default against “Russian” Eurobonds of $3 billion, intends in the near future to submit a summary statement considering Ukraine’s objection.

Possible consequences

Obviously, Ukraine will lose the case despite some support from the West. In addition, Russia also has mechanisms for putting political and economic pressure on Kiev. In the meanwhile, such behavior on the part of Kiev is significantly worsening the economic and financial ratings of Ukraine.