October 25, 2015 / 5:54 PM / 2 years ago

Ukraine PM says won't repay Russian debt if no restructuring deal - paper

Ukraine's Prime Minister Arseny Yatseniuk speaks during a news conference in Kiev, Ukraine, October 15, 2015.Valentyn Ogirenko

BERLIN (Reuters) - Ukraine will not pay off its debt to Russia if Moscow does not agree to join in a restructuring deal involving other creditors, Ukrainian Prime Minister Arseny Yatseniuk told German business daily Handelsblatt.

"We cannot treat Russia differently from other international creditors,” Yatseniuk told the paper, adding if Russia does not agree to the terms offered by Kiev, "then we will impose a debt moratorium and not service the credit.”

Ukraine has agreed a debt exchange with creditors to plug a $15 billion funding gap under an International Monetary Fund-led $40 billion bailout program.

But Russia, which holds a $3 billion Eurobond included in the 14 sovereign and sovereign-guaranteed bonds earmarked for restructuring, has repeatedly said it will not participate in the process.

It argues the debt has the status of an official loan as opposed to a commercial one.

Moscow bought the bond from Kiev in Dec. 2013 as part of a plan to rescue the then pro-Russian president Viktor Yanukovich in the face of street opposition to his rule. He fled two months later as protests widened, opening a rift between Moscow and the new pro-European leaders who followed.

The debt relief deal plays a key part in Ukraine's plans to shore up its war-torn economy which has been brought close to bankruptcy by the separatist conflict in its eastern provinces after years of corruption and economic mismanagement.

Writing by Madeline Chambers; Editing by Richard Balmforth

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