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IMF urges all creditors to support Ukraine's restructuring deal

IMF urges all creditors to support Ukraine's restructuring dealChristine Lagarde, the Managing Director of the International Monetary Fund (IMF), has encouraged high participation by all holders of Ukrainian bonds in the upcoming debt exchange, according to a letter posted on the website of the organization.

As reported earlier, the Ukrainian government reached an agreement with the creditors' committee on restructuring part of the public debt totaling $18 billion. The restructuring involves a write-off of $3.6 billion, deferral of principal payments in the amount of $11.5 billion for four years, as well as setting a coupon rate under all bonds at 7.75% per annum.

"These parameters substantively meet the objectives set under the IMF-supported program to ensure that Ukraine's debt remains sustainable with high probability and that the program is fully financed. Together with full implementation of the program, they will provide the necessary external debt service relief, reduce annual post-program gross financing needs as envisaged, and place public debt firmly on a downward path," Lagarde said in the letter.

"High participation by all concerned eurobond holders in the upcoming debt exchange is paramount, since Ukraine lacks the resources under the program to service its debts on the original terms," Lagarde said.

The IMF Managing Director also noted that Ukraine's economy is "showing signs of recovery, the foreign exchange market has been broadly stable, confidence in the banking system is gradually recovering, and inflation is receding."

According to Lagarde, the Ukrainian authorities have demonstrated a number of positive changes in the banking sector rehabilitation, energy sector reforms, substantial fiscal consolidation and the improvement of the business environment.

"This economic program has received exceptional financing from international financial institutions and bilateral partners, which has exceeded $10 billion so far in 2015, consistent with commitments of more than $25 billion for 2015–2018," Lagarde wrote in the letter.

At this, the IMF official expressed hope that the Ukrainian authorities would continue implementing structural reforms to reaffirm their determination to address the economic imbalances.

The Ukrainian government on September 23 launched the restructuring process of Ukraine's public and government-guaranteed debt and its write-off. The restructuring deal is planned to be completed by December 1, 2015. The results of the debt securities restructuring are expected to be announced in October or early November. At this, the Ukrainian Finance Ministry noted the restructuring should be finalized by the end of November. To complete the debt restructuring process, the Ukrainian government announced a halt to debt servicing payments. Moreover, the temporary suspension of payments is said to be a technical one, affecting 9 out of 14 series of government domestic loan bonds and government-backed eurobonds of state enterprise Fininpro included in the restructuring deal, as well as eurobonds maturing in September and October 2015.

Source: UNIAN
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