President of Ukraine Petro Poroshenko has signed the Supreme Rada-passed bill extending the moratorium on repayment of Ukraine’s $3 billion state debt to Russia for an indefinite period. The amount was borrowed in 2013 by ex-president Victor Yanukovych’s government.
Earlier, on December 18, Ukraine’s government imposed a moratorium on the payment of the debt to Russia for a period until July 1 2016.
The then prime minister Arseniy Yatsenyuk explained that Russia refused to join the agreement signed by private creditors to restructure Ukraine’s debts.A day earlier, on December 17, the IMF Board of Directors recognized the status of Ukraine’s debt to Russia as sovereign (not private or commercial). This means that the government-borrower undertakes the repayment commitments. Then IMF changed its own rules banning financing of a bankrupt-state such as Ukraine. Afterwards, on April 12, the Supreme Rada imposed a moratorium on payment of its foreign debts for an indefinite period. Poroshenko has signed the moratorium today.
In January 2016, Russia filed a lawsuit to the High Court in London against Ukraine over its $3 billion debt. At present, Ukraine is working with legal advisors ahead of the trial.