Ukraine reached an agreement in principle with the Committee of Eurobond Owners of Ukraine, which is important in the process of restructuring the external debt — it will save more than 30 billion dollars.
Points of attention
- Restructuring will allow Ukraine to reduce debt repayment costs by 2033, providing financing for defense and social protection needs.
- Restructuring arrangements will avoid default and help the country meet its obligations to international creditors.
- Most of Ukraine's creditors have already suspended payments until 2027, which contributes to the stabilization of the country's financial situation.
- After the restructuring, the head of government intends to resume payments on the national debt as early as 2025, which indicates the restoration of confidence of foreign creditors in Ukraine.
What the agreement provides
As Prime Minister Denys Shmyhal and Minister of Finance Serhiy Marchenko reported, Ukraine will be able to save $11.4 billion for external public debt servicing over the next three years and another $22.75 billion by 2033.
According to the Prime Minister and the Minister, this will allow to support the macro-financial stability of Ukraine and to finance the needs of defense, social protection and recovery.
Thanks to the agreement in principle with the Special Committee of Creditors (it represents the interests of Eurobond owners) on restructuring, Ukraine simultaneously fulfills its obligations within the framework of cooperation with the International Monetary Fund and avoids default.
If not for the deal, there would be a possibility that Ukraine could declare default after the end of the debt holiday in August.
What preceded it
In August 2022, the owners of Eurobonds agreed to a two-year postponement of payments and their repayment terms. Ukraine has reached such an agreement regarding almost 75% of the total principal amount of securities in circulation. Most of Ukraine's creditors have suspended payment obligations until 2027.
In October 2023, Reuters reported that Ukraine was discussing with foreign bondholders plans to restructure its $20 billion debt and raise new financing.
In May 2024, The Wall Street Journal wrote that foreign creditors of Ukraine want to resume payments on the national debt as early as 2025 .
