As IMF Extends $17.5 Billion Credit To Kiev, Gazprom Demands Debt Repayment
No sooner had the International Monetary Fund (IMF) extended $17.5 billion over four years in new credit to Ukraine, Russia’s private gas giant Gazprom was claiming $2.4 billion of it to settle Kiev’s gas debt.
That’s not exactly what the IMF had in mind. The international lender’s mission chief for Ukraine, Nikolay Gueorguiev, issued a statement on Feb. 13 saying the credit was meant to address “immediate macroeconomic stabilization as well as broad and deep structural reforms to provide the basis for strong and sustainable economic growth over the medium term.”
At the same time, Gazprom sent a letter to its Ukrainian counterpart, state-owned Naftogaz, seeking a payment of more than $2.4 billion, to cover $2.2 billion in debt, plus a penalty fee of about $200 million. The debt, which Kiev doesn’t acknowledge, will be the subject of hearings at the Stockholm Arbitration Institute in early 2016.
Discussing Gazprom’s demand on the Russian television station LifeNew, Kremlin Energy Minister Alexander Novak dismissed Ukraine’s stand on the status of the debt, saying, “Gazprom has every right to claim the funds” because the gas deliveries to Naftogaz are listed on invoices according to an active contract between the two gas companies.
So far, Naftogaz has been paying the $2 billion debt in installments. Now that Ukraine has received the IMF loan, Gazprom wants the entire debt paid now.
Ever since the autumn of 2013, when many Ukrainians were demanding closer ties with the European Union at the expense of Russia, its gross domestic product (GDP) has shrunk by about 7 percent, the IMF says. In February 2014, faced with a popular uprising, the country’s president, Viktor Yanukovich, fled to Russia, which responded by annexing Ukraine’s Crimean peninsula.
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