News / EU

Ukraine vows to fight Russia’s 3-billion debt demands

Thursday, 18 February 2016 2:45 PM [ Last Update: Thursday, 18 February 2016 2:44 PM ]

The file photo shows the Ukrainian Finance Ministry headquarters in Kiev.

Ukraine has vowed to “decisively” fight Russia’s demands for Kiev to fully repay a $3 billion (2.7-billion-euro) loan it failed to return last year.

The Ukrainian Finance Ministry said in a Thursday statement that it would defend its interests, a day after Moscow filed a lawsuit with London's Court of International Arbitration.

“Ukraine intends and is fully ready to decisively defend its interests concerning these eurobonds in the English court,” the Ukrainian Finance Ministry said in its statement.

The lawsuit was filed after Kiev and Moscow failed to reach a private settlement over the Eurobond debt, which was issued in late 2013 and expected to be repaid by Kiev on December 20 last year.

Russian President Vladimir Putin last year offered Ukraine new terms on the repayment of the loan, saying Moscow would accept an annual debt repayment of $1 billion over a period of three years. Kiev rejected the proposal.

The loan was handed to Kiev shortly before former Ukrainian president, Viktor Yanukovych, left Ukraine in 2013 after mass protests erupted there.

Officials in Kiev argue that the loan is not a sovereign one granted by a state to another and is subject to terms agreed of an agreement with its other creditors, but Moscow says it cannot be considered private debt and has refused such conditions.

Kiev has been trying to give a political dimension to the debt, suggesting that Moscow bought Ukrainian bonds in December 2013 in what it calls an act of bribery by the then president, a close ally of Russia.

However, the International Monetary Fund (IMF) has sided with Russia and said the loan carried official status despite Ukraine’s claims.

The recent dispute comes as relations had already been strained between Russia and Ukraine since the Crimean Peninsula rejoined Russia in a referendum in March 2014 and Kiev commenced a military crackdown on pro-Russian forces fighting for greater autonomy in the Russian-speaking Lugansk and Donetsk in the east of the country.

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