Feedback
Business
Ukraine Crisis

Ukraine to Russia: We Can’t Pay $3 Billion Debt We Owe by the Weekend

MOSCOW — Ukrainian Prime Minister Arseniy Yatsenyuk said Friday that his country won't repay a $3 billion debt owed to Russia by this weekend after Moscow's refusal to accept repayment terms already offered to other international creditors.

The "moratorium" on outstanding debt repayments to Russia effectively means that Ukraine is defaulting on a $3 billion debt due Sunday and could jeopardize crucial loans that Ukraine has been receiving from a $17.5 billion bailout deal with the International Monetary Fund.

It's the latest spat between the two neighbors following a run of gas supply disputes and Russia's annexation of the Crimean peninsula.

"After Russia refused to accept our offer despite our attempts to reach a restructuring deal, the government is imposing a moratorium on the repayment of the $3 billion debt to Russia," Yatsenyuk said at a televised government session. "We are ready for court proceedings with Russia."

He did not indicate when Ukraine would be ready to repay the debt. Moscow has previously said it will take Ukraine to court if it fails to pay on time.

Alongside the sovereign debt, the government has decided to put on hold the repayment of a combined debt of $507 million that two Ukrainian state-owned enterprises owe to Russian banks.

Russia officials have not yet reacted to Yatsenyuk's statement.

Ukraine's economy has struggled over the past few years and the country has negotiated repayment terms with creditors, but not with Russia.

In November, Russian President Vladimir Putin proposed a debt restructuring, saying Moscow would be willing to agree to payments of $1 billion a year between 2016 and 2018.

Ukraine turned down the offer, saying it cannot legally offer Russia a better deal than the one it has negotiated with other debt holders.

Kiev has sought to give a political dimension to the debt, hinting that Russia bought Ukrainian bonds in December 2013 in an act of clandestine bribery of then President Viktor Yanukovych who was facing massive anti-government protests at the time.