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Russia Not Legally Bound to Provide Ukraine Rest of $15B Aid -Deputy Fin Min

February 26, 2014

MOSCOWRussia is not legally bound to provide Ukraine with a $15 billion bailout package agreed earlier after street protests in Kiev resulted in the ouster of President Viktor Yanukovych and a major government reshuffle, Russias Deputy Finance Minister said Tuesday.

No one had expected that the situation would develop into such a dramatic scenario," Sergei Storchak told reporters.

Russia agreed to bail out Ukraine in December by buying its Eurobonds and giving the country a discount on its gas supplies. The first $3 billion of the package were invested in Ukrainian bonds in late 2013 and the next $2-billion tranche was scheduled last week. But a new Eurobond wasnt issued as Ukraine became embroiled in deadly clashes between protesters and law enforcers.

Mr. Storchak said that Russia has no legal obligation" to provide Kiev the remaining financial aid of $12 billion. He said the risk of Ukraine defaulting on its debt repayments was high as representatives of its temporary government have claimed the country has no money.

On Monday, one of the Ukrainian opposition leaders and a former foreign minister, Arseniy Yatsenyuk said the treasury has been plundered" and that the country was on the brink of bankruptcy.

Ukraine is due to carry out its first payment on Eurobonds, purchased by Russia in June, and its ability to do this will show whether the country is able to service its debts, Mr. Storchak said in an interview with state television channel Rossiya24 Tuesday.

Ukraine has to fully repay the $3-billion tranche in late 2015.

Mr. Storchak told reporters that Moscow would be opposed to any restructuring of its loan to Ukraine, although a new round of talks with Kiev would be possible later this year after the country forms a new government.

Ukraines acting finance minister said Monday that the government would seek a new loan from the U.S. and Poland within one to two weeks. By the end of 2015, Ukraine hopes to raise some $35 billion from the IMF and Europe to reform its economy and repay its foreign debt.

Mr. Yanukovych was overthrown this weekend after more than 70 people died in street clashes between anit-government protesters and state security forces. The unrest started in late November after the president unexpectedly walked away from a trade agreement with the EU.

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Source: Daily Messenger (Pakistan)

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