It appears, thanks to the generous backing of US taxpayers, Ukraine is about to get its cake and eat it too. On the same day as Ukraine's government unleashes a bill enabling a moratorium on foreign debt repayments - implicitly meaning default "in case of an attack from dishonest lenders" - the defense ministry unveils a plan to increase military spending by 17 billion hryvnia this year statuing that will “make efforts to find possibilities to finance needs” to secure country’s defense. Ukraine bonds are tumbling.
Military Spending is set to surge...
10 agencies, including Defense Ministry, that oversee defense and law enforcement asked Finance Ministry to increase defense spending by 17b hryvnia this yr, ministry in Kiev says on its website.
Finance Ministry will “make efforts to find possibilities to finance needs” to secure country’s defense.
Higher spending is needed because of increased army personnel.
But foreign debtors are set to lose... (as RT reports)
Ukraine’s government has submitted to parliament a bill that allows the introduction of a moratorium on foreign debt payments. The moratorium is to protect the assets of the state and the state sector in case of an “attack” from dishonest lenders.
"To protect the interests of the Ukrainian people, the Ukrainian government today has introduced to the Rada a bill that would give the government the right to suspend payment on Ukraine’s external debts and publicly guaranteed debts. In case of an attack from dishonest lenders on Ukraine this moratorium will protect the assets of the state and the state sector," a statement on the Cabinet website said Tuesday.
The moratorium "will not affect domestic payments and will not affect the stability of the banking system,” the UNIAN news agency said citing s source. In also said the moratorium does not include debt to the IMF, the EBRD and other institutional creditors.
The Cabinet said the moratorium will not affect the bilateral and multilateral obligations of Kiev.
And Ukraine bonds are tumbling...
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Specifcally (as Bloomberg reports),
The eastern European nation is seeking permission to hold off on paying coupons, the first of which coming due is a May 21 payment of $33 million on a $1 billion note maturing in November 2016, according to data compiled by Bloomberg. Ukraine said cutting its debt burden is a question of justice, according to an e-mailed statement on Tuesday.
“This is a logical next step to show people they are serious,” Dray Simpson, the London-based managing director of emerging markets at Cantor Fitzgerald Europe, said by e-mail on Tuesday. “Up to now there has been a lot of talk and very little action and any confrontations have been won by creditors. If Ukraine are going to reverse that trend they need to be firm.”
Time is running out for the country and its bondholders to reach an agreement as a June 15 International Monetary Fund deadline for the restructuring approaches. Failure to strike a deal puts the next tranche of a $17.5 billion IMF loan at risk for Ukraine as it struggles to keep the economy afloat following a yearlong conflict with pro-Russian separatists in the nation’s east.
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Thank you American taxpayer...
