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Russland Premierminister Medwedew
Image: Reuters/E. Shtukina/RIA Novosti

Russia to adopt 'tough stance' on Kyiv debt

May 23, 2015

Russia says it'll adopt a tough stance if Ukraine fails to pay off debts owed to Moscow by its previous government. The warning comes after Kyiv passed a law making it possible to delay payments to foreign creditors.


In an interview broadcast by Russian TV on Saturday, Russian Prime Minister Dmitry Medvedev said Moscow could move to oppose new IMF loans to Ukraine if the country defaults on its debt.

Ukraine's parliament voted this week to allow a moratorium on foreign debt repayments if necessary - sparking a strong reaction from Russia, which is waiting for Kyiv to repay a $3 billion (2.7 billion euros) loan by the end of the year.

Moscow issued the funds in late 2013, a few months before mass protests led to the ousting of former Ukrainian president Viktor Yanukovych.

"They are hinting that they aren't prepared to pay off the debts of the Yanukovych government," Medvedev told state channel Rossiya.

"If it is actually formulated in this way this would undoubtedly be a default of Ukraine... We will take a maximally tough stance in this case and will defend our national interests."

Relations between the two countries have remained tense since a pro-Russian separatist insurgency erupted in eastern Ukraine more than a year ago.

In a bid to reform the struggling economy, Ukraine's government is seeking to reach a debt restructuring deal with its creditors before the next IMF board meeting in June.

Medvedev said any steps by Kyiv's current pro-Western leaders to freeze payments to Moscow would "undoubtedly influence the process of their agreement with the International Monetary Fund," adding that Russia "is not planning to restructure anything" and would oppose new IMF loans if Ukraine defaults. Ukraine received a first $5 million under the IMF rescue program in March.

"We cannot block anything on our own... but naturally we will talk about it," Medvedev said.

nm/ng (Reuters, AFP)

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