Will post-Maidan Kiev cough up?
MOSCOW, December 5 (TASS) - Russia is set to file a lawsuit against Ukraine if Kiev fails to repay the $3-billion debt on December 20, Russia’s Finance Ministry said on Saturday.
"Despite the fact that Ukraine had not filed an official request on restructuring of the $3 billion sovereign debt, Russia suggested that Ukraine repay its debt by $1 billion instalments in 2016-2018 given the United States, European Union or any world-class international finance institutions would provide guarantees," the ministry said underscoring that Russia had offered to Ukraine "the conditions even better than the International Monetary Fund (IMF) had proposed."
"This week, we received an official refusal from the U.S. government to provide loan guarantees to Ukraine," the ministry said in a statement. "Therefore, we have nothing to do but to file a lawsuit against Ukraine if the borrower fails to fulfil its liabilities in full on December 20, 2015, which will mean Ukraine’s sovereign default."
"Besides, now there exist risks that Ukraine will not get another tranche from the IMF as the country’s budget for the year 2016 has not been approved in compliance with the IMF parameters due to the lack of a drafted tax reform and other required structural measures," the Russian Finance Ministry said.
In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovych agreed that Moscow would grant Kiev a credit worth $15 billion through the placement of Ukrainian securities. Under this program bonds for 3 billion dollars were placed on the Irish Stock Exchange on December 20, 2013. Russia purchased the bonds using the funds from its National Welfare Fund.
Finance Minister Anton Siluanov said Russia's proposal to restructure the debt of Ukraine will help the IMF avoid creation of a precedent when the order of providing financial aid by the institution must be changed. After Kiev had reached agreements on debt restructuring with all but for Russia, Siluanov reiterated that Moscow was ready to sue Ukraine at international arbitrary courts and at the IMF as well in case Kiev failed to repay its debt in December.
Last time Ukraine made bond interest payments in June 2015.
In November, speaking on the G20 summit in Turkey, President Vladimir Putin said that Russia had offered Ukraine to repay its $3 billion debt by $1 billion annual instalments in 2016-2018. Putin stressed that Russian not only offered the restructuring but also the terms which are better than those that were asked by the IMF.
However, Russia’s Deputy Finance Minister Sergey Storchak said on December 1 that Ukraine had not officially responded to Russia’s proposal to restructure its $3 billion debt.
According to him, Russia expects Ukraine to reply on this proposal before December 8. "We proceed from the intention to reach an agreement before December 8, because on December 8 the IMF will vote on changes in its policy," he said.