Ukraine may never pay off $3 billion in debts owed to the Kremlin, Russia's economic minister said Tuesday. Economic Development Minister Alexey Ulyukayev's statement on the possibility of never being repaid marks a turnaround from the strict line financial authorities have been toeing by refusing to restructure Ukraine's debt and demanding prompt repayment.
"Announcements made by Ukraine’s authorities prompt this thought," Ulyukayev said, without referring to specific announcements, Russian news agency Tass reported. Ukraine has around $12 billion in foreign reserves, making it difficult -- if not impossible -- to repay Russia.
Ukraine borrowed the $3 billion from Russia in 2013, under former pro-Russia President Viktor Yanukovych. Current Ukrainian authorities said that the corrupt Yanukovych left the country with the money and that they have never seen any of it in Kiev's coffers.
An unusual clause in the bond agreement states that if Ukraine's debt-to-GDP ratio exceeds 60 percent, Russia can demand immediate payment, forcing a default. Ukraine's debt-to-GDP ratio in September was hovering around 100 percent, according to the Economist magazine, though Russia has not yet forced a default.
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The Russian government, for its part, has said it is in desperate need of the money that could fund import infrastructure projects in the nation. The nation has been struggling through a recession, caused in part by U.S. and European sanctions over Russia's annexation of Crimea.
As recently as last month, the Kremlin was still demanding full repayment.
"The $3 billion that we invested should be returned to Russia at the end of the year," Russian Finance Minister Anton Siluanov said in September. "We want to invest the funds in infrastructure and other projects, important to Russia. We need the money, especially in the present circumstances ... Therefore we demand from our colleagues to return the full amount of the debt in accordance with the schedule,” he said, as reported by RT news.