Kiev should ‘walk away’ from $3bn debt to Moscow – US senator

The US and other countries should do everything to grant Ukraine the legal right to shrug off its $3 billion Russian debt due in December, said US Senator Chris Murphy of the Foreign Relations Committee in an interview with the Sputnik news agency.

"The international community should make it clear that we should take whatever steps necessary to give Ukraine the legal cover it needs to walk away from that debt…I don’t think Ukraine should be obligated to pay Russia back a dime," said the Connecticut senator to the agency on Thursday.

The US has been "treating Russia with kid gloves on this question of the debt that Ukraine owes it,” Murphy added.

On September 30, the Senate committee will meet IMF chief Christine Lagarde to discuss Kiev's debt.

In late August, a creditor committee led by Franklin Templeton (which owns about $7 billion of Ukrainian bonds) agreed a 20 percent write-off of some $18 billion worth of Eurobonds. Repayment of the remaining amount will be transferred from 2015-2023 to 2019-2027.

Russia has refused to accept Ukraine's haircut, saying it takes no part in “the so-called debt operation” and recommended that Kiev pay in full and on time to avoid “both litigation costs and penalty interest for overdue payments.”

Ukraine’s government on Tuesday started restructuring public debt and suspended payments from September 23 on a number of liabilities that will be restructured. The restructuring, in particular, applies to the Russian $3 billion Eurobonds. However, the debt to Moscow was not included in the list of non-payments.

In March, the IMF approved a $17.5 billion loan to Ukraine as part of a four-year bailout plan in exchange for austerity measures. The lack of an agreement with Russia thwarts unlocking the funds.

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