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Russia may sue Ukraine over unpaid debt starting December 30 — finance minister

December 09, 2015, 13:14 UTC+3
Russian Prime Minister Dmitry Medvedev said he has a felling Kiev won't pay "because they are crooks"
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© Stepan Petrenko/TASS

MOSCOW, December 9. /TASS/. Russia will be able to take Ukraine to court ten days after December 20 over its default on the $3 billion loan if Kiev fails to repay the debt to the last cent, Russian Finance Minister Anton Siluanov has told the media.

"Our action will be simple. In accordance with the emission prospectus all disputes shall be settled in courts of arbitration in line with international legislation. If the debt fails to be paid, Ukraine on December 20 will still have a ten-day deadline for complying with its commitments. If Ukraine defaults, we will protect our interests legally. We will go to court," Siluanov said.

Siluanov noted that no international partner gave Russia guarantees on Ukrainian debt of $3 bln. It was reported earlier that the United States declined to give guarantees.

"We have said that we were prepared for an installment plan for the repayment of $3 bln over three years, demanding only guarantees from the US, the EU, or a major bank. No one has agreed to give us such guarantees," the minister said.

According to Russian Prime Minister Dmitry Medvedev, the United States and Western countries deciding not to give guarantees on the debt means they lack confidence in solvency of the Ukrainian economy

"If we are not supported in this by the IMF, and by the way, our partners, because the president has spoken about this, and I have written letters to the European Union; we approached the Americans - help Ukraine to ensure debt payment. We are ready to give them an instalment plan as long as they pay," Medvedev said.

"What did they tell us? "We will not help in any way, will not ensure anything" - that means only one thing - they do not believe in the solvency of Ukraine. They did not give guarantees on Ukraine themselves, and did not allow first-class banks to do that, which could do that for Ukraine, if they had adopted an instalment plan," he added.

Medvedev also pointed out that the Russian government’s firm position is that Ukraine must pay on Russian loan.

"They are obligated to repay the loan. This is our firm position," the prime minister said.

However, he noted that he thinks Kiev won't pay.

"I have a feeling that they will not repay [the debt - TASS], because they are crooks. They refuse to return the money," the prime minister said.

"Of course, we will not put up with this. We will go to court, we will seek a credit default and default on all loans of Ukraine," Medvedev said.

The official noted his surprise over the IMF’s stance on the status of Ukraine’s debt to Russia. He dismissed as utterly groundless all doubts whether it was really a sovereign debt.

"Whenever two governments strike a deal, it’s a sovereign loan. This has never been called in question. It’s just amazing international organizations are now saying that this loan 'is not quite sovereign’," Medvedev told Russian TV channels. That’s nonsense! A flagrant and cynical lie!"

The IMF should reflect not only the interests of borrower states but of the lender states, too.

"For the first time ever in its history the IMF has made a decision in favour of supporting a borrower country in defiance of the real state of affairs and in defiance of the existing legal agreements entirely for political reasons. This seriously undermines confidence in the decisions the IMF takes," Medvedev warned.

He believes the international financial system is unfair.

"The largest economies, such as China are not getting what they should be entitled to in the IMF," Medvedev explained.

"Confidence in it will be undermined unless we reform this system in the near future," he said.

Russia’s Minister of Economic Development Alexey Ulyukayev also dwelled upon the issue noting that the decision of the IMF regarding the debt of Ukraine creates a problem for the global market for sovereign debt in general.

"Of course we have a negative attitude. It [the IMF decision on sovereign debt - TASS] is especially strange if applies to the past loans ... This is a problem not only for Russia, Ukraine, but the overall global market of sovereign debt," he said.

According to him, the decision is pushing Ukraine closer to default.

On November 16, the Russian President Vladimir Putin said that Russia has proposed to Ukraine to pay in installments in 2016-2018 years, $1 bln per year.

"In my opinion we made an unexpected offer to our partners," he said. "We haven’t not just agreed to restructure the Ukrainian debt, we have offered better conditions than the International Monetary Fund was asking of us. We were asked to postpone the payment for the next year in the amount of 3 bln [US dollars - TASS]. I said that we were ready for a deeper restructuring. We are ready not to receive any money this year, $1 bln next year, another $1 bln in 20187 and 2018," Putin added.

"Our partners are confident that the creditworthiness of Ukraine will grow, and we have no reason to doubt that we might even receive 3 bln [US dollars - TASS] next year, our partners have no concerns to guarantee the loan," Putin said. He noted that Russia has asked for such guarantees from either the United States government or from the European Union, or from one of the international financial institutions. "We hope that this issue will be resolved by the beginning of December this year, due to a specific timetable of the IMF," Putin said.

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