The updated Memorandum on cooperation under Extended Fund Facility signed by Ukraine and the International Monetary Fund assumes that the restructuring will be achieved of a $3 billion ”Russian debt” on general terms, applied to other holders of Ukrainian Eurobonds, who have agreed to restructuring.
”It is assumed that the Russian-held bond will be restructured consistent with [Ukraine-IMF cooperation] program parameters,” the memorandum says.
The program parameters suggest restructuring of the Eurobond package on general terms, agreed with the bondholders committee by Ukraine`s ex-finance minister, Natalie Jaresko.
”The authorities have continued to pursue good-faith efforts. In terms of process, they have offered to meet with the Russian authorities, offering substantive dialogue in a collaborative process to reach an agreement with Russia on the restructuring of the US$3 billion bond. The terms that have been offered by the Ukrainian authorities have been in line with the financing and debt objectives of the program and would not result in financing contributions that exceed the requirements of the program,” the memo says.
”Good-faith efforts to resolve the remaining sovereign arrears must continue,” reads the memorandum.
Earlier, Russia appealed to the High Court of Justice in London with a lawsuit against Ukraine after Kyiv failed to repay the principal amount of debt and interest on a $3 billion loan received by Ukraine in December 2013 as part of agreements between Russian President Vladimir Putin and the then-Ukrainian President Viktor Yanukovych.
The loan was issued through the purchase of Ukrainian Eurobonds through the Irish stock exchange, which equates it to a commercial loan, but the Russian side insists that it is in fact interstate.
Ukraine included a Russian loan in the perimeter of the sovereign debt restructuring, which it successfully completed on 13 of the 14 bond issues in November last year. ”Russian” bonds were not included in the list of securities that have undergone restructuring and are subject to exchange for new securities, due to the refusal of the Russian Federation to participate in this process.
During the talks, the Russian side insisted publically on obtaining better conditions than other creditors participating in the restructuring, which is prohibited by a memorandum on the exchange of bonds between Ukraine and the holders of restructured bonds.
Ukraine carried out the restructuring of the sovereign debt in the framework of the cooperation program with the International Monetary Fund, approved by the IMF Executive Board in March 2015. In December 2015, the IMF recognized Ukraine`s debt to Russia as official, as it turned out that the government of the Russian Federation was and remains the holder of this debt. At the same time, the Fund has softened the requirements of its lending policy for countries with debt issues, to include sovereign debts, which will allow a number of countries, including Ukraine, to continue cooperation with the IMF even if the debts are not paid, in particular, the ”Russian” debt.
In connection with the refusal by the Russian Federation to participate in the debt operation, the Cabinet of Ministers of Ukraine in December last year introduced a moratorium on payment of ”Russian” bonds and instructed the Ministry of Justice to hire lawyers to protect the interests of Ukraine in court.
The High Court of Justice in England on Wednesday, March 29, approved a motion for expedited consideration of Russia`s lawsuit against Ukraine regarding the so-called ”$3 billion Yanukovych debt,” having not recognized the validity of Ukraine`s arguments in this case, Finance Minister Oleksandr Danyliuk told a Kyiv briefing.