World Economy

Russia Demands Ukraine Pay $3b Debt in Full

Russia Demands Ukraine Pay $3b Debt in Full
Russia Demands Ukraine Pay $3b Debt in Full

Russia will not enter into negotiations on restructuring Ukrainian debt, said Finance Minister Anton Siluanov, and Kiev must repay the $3 billion it owes Moscow in full by the December deadline.

“The $3 billion that we invested should be returned to Russia at the end of the year. We want to invest the funds in infrastructure and other projects, important to Russia. We need the money, especially in the present circumstances... Therefore we demand from our colleagues to return the full amount of the debt in accordance with the schedule,” Tass quoted him as saying.

Russia is responding to a statement Ukraine’s President Poroshenko made on Sunday that Moscow should not be in a more privileged position than other lenders, and more compliant in negotiations.

At the end of August, Ukraine clinched a restructuring deal with its western creditors to reduce the national debt burden by about $3.6 billion. US-born Ukrainian Finance Minister Natalie Jaresko, who was granted Ukrainian citizenship when President Petro Poroshenko appointed her last December, agreed with a creditor committee led by Franklin Templeton (which owns about $7 billion of Ukrainian bonds) on a 20% write-down of some $18 billion worth of eurobonds.

The deal amounted to a default according to ratings agencies Fitch and Standard & Poor’s. Fitch lowered the long-term public debt rating of Ukraine from ‘CC’ to ‘C’. S&P affirmed the ‘CC’ rating, but said that “it would classify any exchange offer or similar restructuring of Ukraine’s foreign currency debt as a default under our criteria.”

In 2013, Russian President Vladimir Putin and former Ukrainian President Viktor Yanukovich agreed that Russia would purchase $15 billion in Ukrainian bonds. Russia decided against buying the extra $12 billion in eurobonds after the Maidan coup, that resulted in Yanukovich being deposed and fleeing the country.