Ukraine to make Russian debt payment in days
The Ukrainian government has vowed to make the next interest payment on a multi-billion-dollar debt to Russia soon after Moscow said it would stop servicing the loan in case of non-payment.
Ukraine’s Finance Minister Natalie Jaresko said Friday that Kiev will pay USD 75 million of the USD three-billion Russian debt in the coming days.
“Two days ago, we paid USD 39 million for Eurobonds, and we will also pay USD 75 million to cover the so-called Russian bonds,” Jaresko told reporters.
The promise came after Russia warned that a failure in making the interest payment would mean Ukraine will be in default.
“June 20 will be a Saturday, so the payment is expected to be received by Monday, June 22,” Russia’s Deputy Finance Minister Sergey Storchak said on June 12.
Moscow extended the loan to the government of former Ukrainian president, Viktor Yanukovych, in December 2013 after Kiev refused to sign an association deal with the European Union (EU) in favor of closer relations with neighboring Russia.
However, the new pro-EU government, which came to power in Kiev months after the overthrow of Yanukovych, has been critical of the loan. Moscow refuses to negotiate and wants the bond’s principal returned when it matures in December.
Jaresko added that Ukraine will continue making the payments in order to ensure its creditors that it wants the debts restructured.
“Ukraine will continue paying its debts to ensure a constructive course of negotiations on debt restructuring,” Jaresko said.
Ukraine has been in negotiations with a group of international creditors with the aim of changing the mechanism of its debt payments. Next week, Jaresko and her team will meet a committee representing the lenders and the International Monetary Fund to discuss the debt restructuring.
Under a proposed mechanism, Kiev wants the amount of debt reduced while it also wants an extension of the debt repayment period. The change in the interest rate is also included in the proposal, something which Russia may oppose as a result of surging hostilities between the two neighbors over a conflict in east Ukraine.
MS/MKA
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