“On December 16, 2015, the Executive Board of the IMF decided that the claim arising from the US$3 billion Eurobond issued by Ukraine on December 24, 2013 and held by Russia’s National Wealth Fund (NWF) is an official claim for the purposes of the Fund’s policy on arrears to official bilateral creditors,” the IMF said in a press release, Joinfo.ua reports with reference to Interfax-Ukraine.
The board considered the issue without a meeting.
The Ukrainian debt to Russia is due on December 20. If Ukraine does not pay off the Eurobonds, Russia will go to court.
Russian Finance Minister Anton Siluanov said that once the status of the debt is confirmed, Moscow will hold negotiations with Ukraine on changing the list of commercial creditors, on which Russia was included. “After the confirmation of the status by the IMF, Ukraine must, we believe, make a decision to revise the list of commercial creditors approved by the government,” Siluanov said.
The bonds held by Russia were included in this list, but Moscow refused to participate in negotiations alongside commercial creditors, who ultimately agreed to write off 20% of Ukraine’s debt and reschedule payments on the remainder.
The terms of Ukraine’s agreement with bondholders stipulates that Kyiv cannot grant better debt restructuring conditions to any other commercial creditors. Since the official status of the debt to Russia has now been confirmed, this restriction does not apply to the bonds held by Russia.
“Even the IMF, when making the latest changes in its documents [needed to continue the aid program to Ukraine despite a possible default on debt to Russia] indicated that an official creditor should have better restructuring conditions than commercial creditors. The Fund writes that the decision to change rules for financing programs when there is a default does not change established practice where an official creditor receives better conditions than commercial ones,” Siluanov said.