Ukraine reports an agreement with its creditors
In the next two years, a two-year payment deferral is running out for creditors of Ukraine. Kiev needs the returning billions urgently for the fight against Russia. The creditors are granting concessions to the beleaguered country.
Ukraine is securing more funds to finance its defense against Russia. Ukrainian Finance Minister Sergei Marchenko announced a principles agreement with international creditors. These creditors are waiving part of their money. With this, Ukraine will have 11.4 billion US dollars at its disposal for other purposes over the next three years, according to Marchenko.
This agreement concerns overdue bond debts of Ukraine. For almost two years, there have been concessions from these creditors, allowing the country more flexibility. These arrangements are set to expire in the coming days, which is why a larger agreement for debt restructuring had to be found. This is the first time this has been achieved by a country in the midst of a war, Marchenko said.
The agreement provides that creditors waive 37% of the funds. Until 2027, Ukraine will be financed extensively by the International Monetary Fund. The seven leading Western industrial countries have also offered Ukraine a Mega-Credit in the volume of 50 billion US dollars. For this loan, interest payments from frozen Russian funds will be used.
The creditor group, which owns 22% of the state bonds, reported that the negotiations went quickly and constructively over the counter. It is intended to help Ukraine regain access to the international capital market. In addition, the goal is to finance the reconstruction of the country.
- Following the agreement, Ukraine will no longer need to repay 37% of its State debt to the creditor group, which primarily includes investors from London.
- With the new monetary policy in place, a significant portion of the waived funds will be allocated towards Kiev's strategies in politics and the defense against Russia.
- Despite the ongoing conflict, Ukraine has managed to restructure its debt with the support of its creditors in Kiev and London, which could potentially pave the way for Ukraine to seek financial aid in cities like London for post-conflict reconstruction.
