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18Dec15

Deputy Finance Minister: Ukraine has no chance to win lawsuit on $3 bln debt to Russia

Ukraine stands no chance to win lawsuit on its $3 bln debt to Russia, Deputy Finance Minister Sergey Storchak said on Friday.

"As soon as the non-payment fact is easily established by the British court this will mean a very quick and specific procedure on taking a final decision. In this respect, Ukrainian colleagues as potential participants of a legal proceeding have no chance to win it," Storchak said, admitting though that the court's pronouncement will be followed by the issue of execution of the court ruling, but "that is another issue."

Earlier on Friday Ukraine's Cabinet imposed moratorium on payment of the Russian debt. Ukrainian government also imposed moratorium on the payment of $507 mln by 2 Ukrainian companies to Russian banks.

In December 2013, Russian President Vladimir Putin and the then Ukrainian President Viktor Yanukovych reached an agreement that Moscow would extend a 15 bln U.S. dollar loan to Kiev through placing Ukrainian securities. Under the deal, $3 billion worth of bonds were listed on the Irish Stock Exchange on December 20, 2013 and acquired by Russia using the funds from its National Welfare Fund.

Later on, Ukraine tried to challenge the loan's status and reduce it to that of commercial credits subject to restructuring. Russia objected to this approach.

In November 2015, Putin said Russia was ready to restructure Ukraine's debt in case the United States, the European Union or any big international financial institute gave its guarantees to Russia. No guarantees were granted.

On December 17, the International Monetary Fund's board recognized the official status of Russia's $3 billion loan to Ukraine.

The deadline for repayment of the Ukrainian debt is December 20. In the event it fails to do that, Russia will go to law ten days after that date.

[Source: Itar Tass, Moscow, 18Dec15]
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