The non-payment won’t trigger cross-defaults on Ukraine’s other sovereign debt since it has all been restructured.
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Yatsenyuk announced the payment freeze at a government meeting in Kiev on Friday, saying the step was needed after Russian Federation “refused to sign an agreement on restructuring”. According to Siluanov, Russia will appeal to a court to recover the debt, should Ukraine fail to pay it within the grace period until December 31. Moscow said it would file a lawsuit against Kiev to the global court if the payments were not met.
The suspension would stay in place “until the acceptance of our restructuring proposals or the adoption of the relevant court decision”, Yatsenyuk said.
Germany’s Association of German Chambers of Commerce and Industry (DIHK) expects exports to Russian Federation to shrink to 20 billion euros in 2015.
He said the IMF’s recent concerns about the Ukrainian parliament’s decision to reject a proposed budget for the next year and a new tax code could indicate a “growing risk that the country’s bailout could be put on hold”.
Ukraine and Russian Federation are on a collision course over major trade and finance disputes, as the European Union prepares to extend sanctions against Moscow for annexing Crimea and fomenting a bloody conflict in eastern Ukraine.
Bloomberg notes in a story on Monday that Friday’s defaults makes the prospect of Russian Federation suing Ukraine in London court a “real possibility”. Ukrainian leaders have accused Moscow of sending troops and weapons to the east, a claim the Kremlin has vehemently denied.
On Friday, Ukraine’s finance ministry said that it expects the new rule to “allow the International Monetary Fund to continue financing Ukraine”, despite Kiev’s position.
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Medvedev’s announcement came as European Commissioner for Trade Cecilia Malmstrom was engaged in the latest attempt to reach common ground on the issue with Russia’s Economy Minister Alexei Ulyukayev and Ukrainian Foreign Minister Pavlo Klimkin in Brussels.
