REUTERS
Ukraine is not able to repay a $3 billion debt owed to the Russian Federation in accordance with its initial terms without violating the financing targets established under the Extended Fund Facility of the International Monetary Fund (IMF), Ukraine's key creditor, the Ukrainian Finance Ministry said in a statement posted on its website.
"The December 2015 eurobonds constitute debt obligations which Ukraine cannot pay in accordance with their initial terms without (i) violating the financing targets established under the Extended Fund Facility and (ii) breaching its contractual obligations under the 'most favored creditor clause' included in the new sovereign debt securities issued in November 2015 as part of the recently completed debt operation," the statement reads.
At this, the ministry stressed it hoped for further assistance of the IMF and continuation of cooperation with the Fund.
As noted in the statement the "Ukrainian government takes note of the IMF Executive Board's view that the so-called 'Russian bond' is an official claim for the purposes of the Fund's policy on arrears to official bilateral creditors."
The Ukrainian government, therefore, expects that "the IMF's new Lending into Official Arrears policy will allow the IMF to continue financing Ukraine under the Extended Fund Facility, notwithstanding Ukraine's position on the December 2015 eurobonds and any suspension of payment thereunder," the statement reads.
The Finance Ministry said that Ukrainian government had been negotiating "in good faith all along and in line with the IMF-supported program's debt operation targets, without prejudice to its position on the underlying debt obligations themselves."
"The holders of the December 2015 eurobonds decided not to participate in the debt exchange which was accepted by all of Ukraine's other bondholders. Under the terms of the new Ukrainian bonds issued on November 12, 2015 in the debt exchange, Ukraine is prohibited from paying holdout creditors in accordance with the original contractual terms," the ministry's statement reads.
Furthermore, Ukraine may not settle with holdout creditors on terms which have a net present value higher than the net present value at issue of the sovereign bonds the holdout creditors would have received had they participated in the exchange operation.
At this, the ministry stressed Ukraine remains committed to negotiating in good faith a consensual restructuring of the December 2015 eurobonds which will allow it to remain in compliance with the financing targets agreed with the IMF under the Extended Fund Facility, while meeting its contractual commitments to other bondholders.
As UNIAN reported earlier, on December 16, 2015, the IMF Executive Board decided that the claim arising from the $3 billion eurobond issued by Ukraine on December 24, 2013, and held by Russia's National Wealth Fund should be considered to be an official claim.