Ukraine, Russia ready to discuss USD 3 bln debt settlement

The Ukrainian government is ready for talks with the Russian side on restructuring a USD 3 bln debt, Finance Minister Oleksandr Danyliuk told Interfax-Ukraine on Sept. 13. “In line with Ukraine’s obligations in its current program with the IMF, namely on demonstrating ‘good faith efforts’ in negotiations with Russia on the debt issue, Ukraine is ready to enter into further talks on the possible settlement of the debt dispute,” Danyliuk said. At the same time, he said Ukraine is also preparing for a court hearing on the debt issue, scheduled for January 2017.

The Russian side confirmed possible talks with Ukraine on the debt issue, as stated by Finance Minister Anton Siluanov the same day. He added there are plans to meet with Ukraine’s Finance Minister in October, with the mediation of Germany.

Recall, Ukraine introduced a moratorium on the repayment of a USD 3 bln Eurobond, owned by the Russian state fund, which was due in December 2015. The moratorium was introduced after the Russian side refused to participate in the restructuring of Ukrainian sovereign Eurobonds a year ago.

In other news, Ukrainian President Petro Poroshenko said he hopes the IMF executive board will approve a USD 1 bln loan tranche to Ukraine at its scheduled meeting on Sept. 14.

Alexander Paraschiy: With Danyliuk’s statement yesterday, Ukraine looks much more like an entity “acting with good faith efforts” on settling its debt with Russia. The “good faith” criterion is vital for the IMF to provide its next loan tranche to Ukraine despite the unpaid USD 3 bln debt. This significantly increases the likelihood of a positive IMF decision today. Based on Poroshenko’s words, we are anticipating that the IMF will provide Ukraine with a USD 1 bln loan tranche this month.