Ukrainian Prime Minister Arseniy Yatsenyuk says his country won't repay a $3 billion debt Eurobond owed to Russia by this weekend.
Yatsenyuk announced at a televised government session December 18 a "moratorium" on any debt repayments to Russia. He did not indicate when Ukraine would be ready to repay the debt.
That effectively means that Ukraine is defaulting on the debt. Moscow has previously said it will take Ukraine to court if it failed to pay on time.
The Eurobond matures on December 20, but Ukraine has a 10-day grace period before it will be considered officially to be in default.
Yatseniuk also said Ukraine would cancel payments on $507 million of Ukrainian commercial debt held by Russian banks.
Relations between the two neighbors soured after Russia annexed the Crimean peninsula in March 2014 and threw its backing behind separatist rebels in eastern Ukraine.
Ukrainian leaders have accused Moscow of sending troops and weapons to the east, a claim the Kremlin has denied.