Voices from Russia

Saturday, 10 January 2015

Russia Might Require Kiev to Pony Up 3 Billion USD to Pay Off Debt Earlier

empty pockets no money


A Russian government source told us, “The situation emerging in the Ukrainian economy and financial outlook suggests that a number of parameters used to grant the Ukraine a Russian bond issue are now moot. In these circumstances, it’s likely that Russia would demand an early repayment of the 3 billion USD (188.7 billion Roubles. 18.64 billion Renminbi. 189.62 billion INR. 3.54 billion CAD. 3.72 billion AUD. 2.54 billion Euros. 1.98 billion UK Pounds) debt owed us from the Ukraine in the near future”. Earlier, sources familiar with negotiations on economic assistance to the Ukraine said that Russia could offer to defer the repayment of Ukrainian Eurobonds for 3 billion USD from the end of 2015 until at least the end of International Monetary Fund (IMF) programme, which would last several years. Otherwise, international financial institutions might be reluctant to allow the Ukraine to make new loans. As one source familiar with the negotiations between Kiev and the IMF told us, in 2015, the Ukraine has to pay out 6.5 billion USD (408.86 billion Roubles. 40.38 billion Renminbi. 410.84 billion INR. 7.68 billion CAD. 8.04 billion AUD. 5.48 billion Euros. 4.3 billion UK Pounds), of which almost half represents debt to the Russian Federation. Only 1.5 billion USD (94.35 billion Roubles. 9.32 billion Renminbi. 94.81 billion INR. 1.77 billion CAD. 1.86 billion AUD. 1.27 billion Euros. 990 million UK Pounds) of it represents payments to the IMF. It turns out that if financial institutions in Europe and America raise funds for the Ukraine, the lion’s share of such government money from these countries would have to go to Russia to repay earlier loans.

The Ukraine has a serious political crisis that affects its economy and the public sector, in fact, the country is on the verge of default. The authorities want to improve their situation in re foreign borrowing. The IMF started a two-year credit programme for the Ukraine of 17.1 billion USD (1.076 trillion Roubles. 106.24 billion Renminbi. 1.08 trillion INR. 20.22 billion CAD. 21.16 billion AUD. 14.42 billion Euros. 11.3 billion UK Pounds). Of this amount, Kiev received 4.6 billion USD (289.36 billion Roubles. 28.58 billion Renminbi. 290.74 billion INR. 5.44 billion CAD. 5.7 billion AUD. 3.88 billion Euros. 3.04 billion UK Pounds) in 2014; the remaining funds should come in 2015. Kiev also got financial assistance from the World Bank, EBRD, the European Investment Bank, and a number of foreign sources. Overall, in 2014, the Ukraine received financial assistance amounting to about 9 billion USD (566.1 billion Roubles. 55.92 billion Renminbi. 568.86 billion INR. 10.62 billion CAD. 11.16 billion AUD. 7.62 billion Euros. 5.94 billion UK Pounds). In this case, the total national debt in 11 months amounted to 69.3 billion USD (4.36 trillion Roubles. 430.54 billion Renminbi. 4.38 trillion INR. 81.92 billion CAD. 85.74 billion AUD. 58.48 billion Euros. 45.84 billion UK Pounds).

In 2013, Russia decided to invest up to 15 billion USD (943.5 billion Roubles. 93.2 billion Renminbi. 948.1 billion INR. 17.7 billion CAD. 18.6 billion AUD. 12.7 billion Euros. 9.9 billion UK Pounds) in Eurobonds for the Ukraine. Russia sent the initial tranche of 3 billion USD, with a maturity of two years (coupon rate of 5 percent per annum coupon, with payments every six months). However, the Ukraine didn’t receive the remaining 12 billion USD (754.8 billion Roubles. 74.56 billion Renminbi. 758.46 billion INR. 14.16 billion CAD. 14.88 billion AUD. 10.16 billion Euros. 7.92 billion UK Pounds), as the Russian government judged that the change of government in the Ukraine was illegitimate.

10 January 2015

Rossiya Segodnya


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