Cabinet clarifies position on moratorium on foreign debt payments

17:01, 19 May 2015
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The government bill on the right to impose a moratorium on payments under external debt is aimed at protecting Ukrainian assets from attacks of unscrupulous creditors, according to a statement issued by the Cabinet on Tuesday.

UNIAN

"In the event of an attack by unscrupulous creditors with respect to Ukraine, the moratorium protects the assets of the state and the public sector. Any moratorium declared in accordance with the new law will not, in the future, affect our bilateral and multilateral debt, nor will have impact on our domestic obligations", the statement reads.

According to the cabinet, the law will be applied to sovereign external direct and guaranteed obligations specified in the annex to the law, except for the obligations of the two state-owned banks and Ukrzaliznytsia (Railway Transport Administration).

The cabinet also stressed that Ukraine is in a difficult economic situation, and payments on foreign currency debt obligations alone for the next four years will amount to around $30 billion, including debt servicing and repayment.

"The government has the right to channel funds received from the taxpayers in Ukraine to the needs of its citizens, rather than to repayment of loans attracted by the kleptocratic regime of Yanukovych", the statement further reads.

The government said that the United States, European Union and international financial institutions support Ukraine in this difficult time.

"But it is important that the holders of our debt make their own contribution to these efforts. Out of $3.1 billion of financial assistance received, $2.4 billion were used for repayment. In this regard, $15.3 billion will serve for reducing pressure on the balance of payments over the next four years, which we expect to receive following the results of negotiations with our international commercial creditors on debt restructuring," according to the statement.

The cabinet said that without the strong participation of commercial lenders Ukraine would not be able to stabilize the situation and resume economic growth in 2016.

As UNIAN reported earlier today, the cabinet has developed a draft law on granting the government the right to impose a moratorium on foreign debt payments. According to a source close to the government, the list of debts that may be subject to moratorium does not include debts to the IMF, the EBRD and other institutional creditors.

Also, according to the source, the right to declare a monatorium can be used by the cabinet only in relation to debts secured by the government in the list of public and quasi-public debt to be restructured, with the exception of securities of the state banks – Oshchadbank (Savings Bank) and Ukreximbank, as well as securities of the State Administration of Railway Transport Ukrzaliznytsia.

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