Ukraine’s western government creditors agree debt service freeze

PARIS, France – Ukraine’s western government creditors concluded on Wednesday, September 14, a memorandum of understanding (MOU) on a planned debt service suspension, the group said.

The group, which includes Canada, France, Germany, Japan, the United Kingdom, and the United States, said in July that they would provide a coordinated suspension of Kyiv’s debt servicing to the end of 2023 and potentially for an additional year.

“This MOU eases Ukraine’s liquidity pressures and allows its government to increase social, health, and economic spending in response to Russia’s unjustified, unprovoked, and illegal war of aggression,” the group said in a statement issued by France’s finance ministry.

The group called on other official bilateral creditors to also quickly reach a debt service suspension deal with Ukraine.

With a monthly fiscal shortfall of $5 billion, Ukraine is heavily reliant on foreign financing from western allies and multilateral lenders including the International Monetary Fund and the World Bank.

“As with our budget support to Ukraine totaling $8.5 billion, the debt service deferral is one more way in which the United States stands with Ukraine in its fight against Russia’s brutal war,” US Treasury Secretary Janet Yellen said in a separate statement.

The western creditors group said it welcomed reforms Ukraine is implementing to address the consequences of the war and it also welcomed an agreement by bond and warrant holders to defer debt payments for two years.

Ukraine’s overseas private creditors backed in August its request for a two-year freeze on payments on almost $20 billion in international bonds, a move that will allow the war-ravaged country to avoid a messy debt default. – Rappler.com