Ukraine President Petro Poroshenko has signed a bill allowing the government to impose a moratorium on debt repayment.
The law will allow the government to suspend external debt repayment to private investors and remains in force until July 2016.
The Ukranian government says it made the move in order to protect state assets.
Financial analysts predict it is the first step towards a default on its liabilities.
Investors are considering debt extensions as an option.
Ukraine must repay a crippling $4.3bn in the fourth quarter of 2015, $3bn to Russia, Moscow has made it plain it has no interest in renegotiating the debt, which matures in December.
In June Kyiv must handover $75mn in Eurobonds to Russia or end up in court.
Ukraine’s external debt is running around $30bn, while its internal debt is $17bn, according to the government.
The country’s gold and foreign currency reserves amount to less than $10bn.