KIEV (Reuters) - Ukrainian Finance Minister Natalia Yaresko warned creditors on Friday not to block progress in restructuring talks, emphasising that Kiev was ready to cut off debt payments if bondholders shun its latest proposal.
Ukraine, which is seeking to plug a $15.3 billion funding gap, is meeting a group of its largest bondholders and the International Monetary Fund on June 30 in Washington to discuss what it has called a "last chance" offer.
The two sides are at odds over the necessity of a writedown in the face value of the bonds. Talks have been going on for three months with neither side showing signs of budging from their positions.
"The government recognises that the creditors may not be prepared to agree, and may continue to block progress toward a solution," Yaresko said in a statement.
"In this case the government is prepared to use its existing legal power to suspend payments."
Kiev says a writedown is needed to make its debt burden more acceptable, while creditors say the necessary savings can be achieved without such a "haircut".
On Wednesday, the creditor group, which is led by Franklin Templeton, criticised Kiev for targeting them for haircuts without asking all its creditors to take such cuts.
The $23 billion of debt earmarked for restructuring includes obligations of state-owned Ukreximbank, Oschadbank and Ukraine railways. Neither Oschadbank nor Ukreximbank are seeking a principal or coupon reduction in their restructurings.
(Reporting by Alessandra Prentice; Editing by Alison Williams)
