In Ukraine, May 5, 2016

Ukrainian President Petro Poroshenko has approved a bill extending a moratorium on paying off the country’s external debt, including the $3 billion Eurobond owed to Russia. The law, proposed by the country’s parliament on April 12, was signed by the president on Wednesday. The existing freeze on paying off state debt was to expire on July 1.

Lawmakers say by changing the moratorium’s final date it will provide more time legally for Ukraine to find a way to restructure its external debt.

Kiev’s debt to Moscow is the result of a deal sealed in 2013 between President Vladimir Putin and former Ukrainian President Viktor Yanukovich. Moscow agreed to give Kiev a $15 billion loan by buying Ukrainian Eurobonds. The first tranche of $3 billion was purchased by Russia and was to be repaid by December 20, 2015.

Former Ukrainian Prime Minister Arseny Yatsenyuk promised to pay $30 billion in external debt, including the $3 billion owed to Russia, over four years. However, Ukraine defaulted on the payment, calling on Moscow to restructure the debt. In February, Russia filed a lawsuit against Ukraine in the High Court in London, seeking payment of the debt with interest.

The International Monetary Fund recognized Kiev’s debt to Russia as official and sovereign, with Ukraine, as the borrower state, responsible for the loan repayment.


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