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Kiev's Foreign Debt Repayment Moratorium De Facto Announces Default - Putin

Sputnik News

16:15 20.05.2015(updated 18:35 20.05.2015)

Vladimir Putin instructed Russian Prime Minister Dmitry Medvedev to assume control of Ukraine's repayment of its $3-billion debt in Eurobonds that Russia bought in 2013.

MOSCOW (Sputnik) – Ukraine's bill allowing to impose a moratorium on foreign debt repayments is a de facto announcement of default, Russian President Vladimir Putin said Wednesday.

On Tuesday, Ukraine's parliament adopted a bill allowing Ukraine to freeze repayments of its foreign debt.

"This de facto announcement of a looming default demonstrates that the level of responsibility and professionalism [of the country's leadership] appears to be low, despite the fact that the country is being ran from the outside."

The bill, which is yet to be signed into law by the country's president, can be applied to Ukraine's payments on the $3-billion Eurobond issue bought by Russia in late 2013.

The Russian leader instructed Prime Minister Dmitry Medvedev to assume control of Ukraine's repayment of the debt.

The issue of Ukraine's association agreement with the European Union needs to find an outcome that is acceptable for Russia, Vladimir Putin said.

Russia has repeatedly stated that the Ukraine-EU Association Agreement carries economic risks for Moscow-Kiev relations. Moscow fears that it could precipitate an uncontrolled flow of duty-free goods from Europe into Russia through the Ukrainian border. To prevent this, Russia would be forced to adopt protectionist measures to defend its domestic producers, such as hikes in customs tariffs on Ukrainian goods.

The debt should be repaid to Russia this December. Last week, Russia's Finance Minister Anton Siluanov said that in case Kiev does not repay it by end of the year, Moscow will file a complaint with the arbitration court.

Ukraine's total debt is estimated at about $50 billion, of which $30 billion are external and $17 billion internal debts, according to Ukrainian Prime Minister Arseniy Yatsenyuk.

Kiev has received several aid packages from international financial institutions, including the International Monetary Fund (IMF), which has pledged to transfer $17.5 billion to the country over the next four years, with the first $5-billion installment being received.

"Our goal is to find an outcome that is acceptable for the Russian Federation," Putin said during a meeting with government members.

The association deal presupposes a political and economic association between Ukraine and the European Union. It was signed in March 2014 by an interim Ukrainian government following the overthrow of President Viktor Yanukovych, who had put off the signing of the agreement.

Russia's Economic Development Minister Alexei Ulyukaev on Monday said that Moscow would not impose duties on Ukrainian goods, provided all of its concerns related to the Ukraine-EU association agreement were accommodated.


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