Foreign creditors are pushing Ukraine to resume debt payments – The Wall Street Journal

Foreign creditors are pushing Ukraine to resume debt payments after a long hiatus.

This is reported by The Wall Street Journal.

The article refers to holders of Ukrainian bonds, including investment companies BlackRock and Pimco. According to sources, they are forming a committee and hiring consultants for negotiations to resume payments, which were suspended after the start of the war in Ukraine.

The patience of Ukraine’s international creditors is “beginning to wane,” the publication writes. They want the Ukrainian authorities to sign a deal under which interest payments on loans would resume in exchange for writing off a “significant portion” of the debt.

It is reported that such a proposal has already been presented to the Ukrainian authorities. Investors plan to receive $500 million in interest payments annually from Ukraine. In total, Ukrainian bondholders hold €20 billion.

The WSJ writes that if Ukraine does not resume payments to foreign creditors, it could face default as early as autumn. If a deal is not reached, Ukraine may declare default – as in August, the grace period for servicing the government debt imposed by foreign funds after Russia’s full-scale invasion will expire.

At the same time, the US authorities and other Western countries are concerned about the demands of creditors. They fear that the money allocated to Ukraine as aid will be used to pay interest, WSJ notes. These countries have provided credit holidays to Kyiv until 2027.

Recall that in March, Ukraine’s national debt increased by $7.4 billion. The growth of the national debt was primarily influenced by record levels of external borrowing. Overall, since the beginning of the war, the national debt in hryvnias has almost doubled.

It was also reported that at the end of March, Ukraine and the US signed an agreement to defer payments on the state debt. This year, Ukraine plans to conduct another extensive restructuring of external debt. The previous one was in 2022.