Russia says Ukraine won’t repay debt because ‘they are crooks’, vows court action

9 Dec 2015 | Author: | No comments yet »

Putin orders government to sue Ukraine if defaults on US$3 billion debt.

MOSCOW: President Vladimir Putin on Wednesday (Dec 9) ordered his government to sue Ukraine if the ex-Soviet republic defaults on its US$3 billion (about €2.7 billion) debt to Russia. “Go ahead, take it to court,” Putin told Finance Minister Anton Siluanov at a government meeting while discussing the loan given to former Kremlin-backed president Viktor Yanukovych in 2013, which must be repaid this month.Russian Prime Minister Dmitry Medvedev accused Ukrainian leaders of being ready to cheat his country over a $3 billion bond that comes due this month as he stepped up threats of retribution if the amount isn’t paid. “As they say, hope dies last,” Medvedev said in an annual interview with Russian media shown on state television Wednesday. “But I have a feeling that they won’t return it, because they’re swindlers. The dispute has been hampering the International Monetary Fund’s US$17.5-billion rescue plan for Ukraine, which restricted Kiev’s ability to restructure billions of dollars in debt, including some held by Moscow.

In a televised interview on Wednesday, Medvedev said he thought Moscow and Kiev had “almost no chance” to come to an agreement on the outstanding debt. “But we will keep trying to reach an agreement until the very end of December,” Medvedev added. Ukraine is barred from redeeming the note, due Dec. 20, in full under a $15 billion restructuring accord reached with commercial lenders. “We won’t put up with this,” Medvedev said. “We’ll got to court. We’ll seek default on the debt and will seek default on all of Ukraine’s obligations.” Ukraine’s Finance Minister Natalie Jaresko said she wouldn’t comment on Russia’s “political statements” on the debt, referring to Medvedev’s remarks.

Last week Prime Minister Arseniy Yatsenyuk, who said Ukraine is ready for a court battle with Russia, reiterated that his government won’t repay the debt to the Kremlin without a restructuring. Russia could try to take legal action to keep Ukraine from making payments on its other international bonds, as holdouts in Argentina’s restructuring have done. Andrew Wilkinson, a partner at law firm Weil, Gotshal & Manges LLP, who worked on Ukraine’s bond restructuring, has said provisions were made to block Russia from going down that route.

Ukraine’s dollar-denominated bonds climbed on Wednesday after the IMF’s policy change increased the likelihood of the country receiving more aid from the fund. Russia set a deadline of Tuesday for a response to its offer, saying the impasse can only be resolved “in the framework” of the IMF-led program of assistance for Ukraine because the nation lacks the financial means to pay.

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