This follows the approval of a €1 billion EU loan to Kiev
The Ukrainian government has moved to delay payments on foreign debt for two years, the country’s media reported on Wednesday. The restructuring will have to be approved by the creditors first, the reports add.
According to an earlier story by Bloomberg, Kiev also wants to change the terms of GDP warrants as it explores the possibility of debt restructuring. GDP warrants are a subset of securities, mostly bonds, linked to GDP, where the payment amount varies in accordance with a country’s output. The European Bank for Reconstruction and Development predicted in May that Ukraine’s GDP will contract by 30% this year.
Kiev wants to reach an agreement with bondholders by mid-August, before a $1.4 billion redemption and interest payment in September, the outlet says, adding that according to its own calculations, the move may save $3 billion in debt redemption costs over two years, and more with interest payments.
On Tuesday, Ukraine’s finance minister signed a credit agreement with the EU to receive a €1 billion ($1 billion) long-term loan from the bloc at the end of this month, according to a statement published on the website of the Ukrainian government.
In March, the European Commission proposed a €9 billion loan to Ukraine, set to be backed by guarantees from the governments of EU members. However, the bloc has struggled to structure the aid due to widespread concern about Kiev’s ability to pay its debt.
Separately, a €1.5 billion loan by the European Investment Bank was said to have been blocked within the EU because more guarantees were needed to secure the sum. Since February, the EU has given Ukraine a total of €2.2 billion in macro-financial support.
President Vladimir Zelensky said in June that Ukraine needs $5 billion in aid per month to stay afloat; however, the figure was nearly doubled later, when a presidential economic adviser reportedly told the Financial Times that Kiev needs $9 billion per month and that “it would be next to impossible” for Ukraine to survive without the money.
For more stories on economy & finance visit RT’s business section