Russia, Ukraine fail to reach deal on Kiev debt to Moscow, talks to continue

By Lidia Kelly LIMA (Reuters) - Russian Finance Minister Anton Siluanov and his Ukrainian counterpart, Natalia Yaresko, failed to reach a deal at their meeting on Friday on restructuring Kiev's $3 billion (£2 billion) debt to Moscow, but agreed to continue talking. Ukraine has agreed a debt restructuring deal with a group of its largest creditors in order to plug a $15 billion funding gap under an International Monetary Fund-led $40 billion bailout programme, but major creditors still need to approve the plan. "We stated our position on the need to repay the debt to the Russian Federation," Siluanov said after his talks with Yaresko that took place on the sidelines of the IMF and the World Bank semi-annual meeting. It was the first meeting between the countries' finance ministers since January, when Ukraine announced its plans to restructure its foreign debt. "(Yaresko) provided details on the debt restructuring agreement reached with Ukraine's Ad Hoc Committee of creditors and called Russia to participate in that agreement," the Ukrainian side said in a statement. Russia has said numerous times that Ukraine must repay the debt in December, when it falls due. Ukraine has included the $3 billion Eurobond among the sovereign and sovereign-guaranteed bonds to be restructured, but Siluanov reiterated that Russia does not see the debt as commercial. Moscow bought the bonds from Kiev before the pro-Russian president Viktor Yanukovich was ousted early last year, opening a rift which widened with the annexation of Crimea and the outbreak of the pro-Russian rebellion in eastern Ukraine. "Colleagues from the Ukrainian Ministry of Finance said that they had no such money in the budget and invited us to participate in the restructuring, together with commercial lenders," Siluanov said. "We are a sovereign (lender). So for us, such conditions are unacceptable." Yaresko said in her statement that "all creditors can participate in the exchange until Oct. 29." Friday's meeting was brokered by Germany and attended by German Finance Minister Wolfgang Schaeuble. "We have agreed to continue the dialogue," Siluanov said. (Reporting by Lidia Kelly; Editing by Ruth Pitchford and Nick Macfie)