Group of creditor countries ready to suspend servicing Ukraine's sovereign debt

MOSCOW. July 20 (Interfax) - The group of Ukraine's creditors comprising Canada, France, Germany, Japan, Britain and the United States supports Ukraine's proposal to defer payments on the country's obligations and repayments; and the group recommends that holders of Ukraine's Eurobonds accept the proposal, as well as revise the terms of GDP warrants.

"As Ukraine's official creditors, we intend to ensure an agreed suspension of Ukraine's debt servicing from August 1, 2022, until the end of 2023, with the possibility of an additional year," according to a statement posted on the website of Germany's Finance Ministry.

The group of creditors, whose supervisors include Australia, Austria, Belgium, Brazil, Denmark, Finland, Ireland, Israel, Italy, South Korea, the Netherlands, Norway, Spain, Sweden and Switzerland, "urges" all other official bilateral creditors to reach agreements with Ukraine as soon as possible on the suspension of debt servicing.

The statement indicates the extraordinary current circumstances, and acknowledges Ukraine's exemplary debt servicing record to date.

The group of creditors has also indicated that it would continue to coordinate and assess attentively the situation with the support of the International Monetary Fund and the World Bank.

Meanwhile, Ukraine's Finance Ministry said that the country had already discussed the proposals with a group of major debt holders, including Amia Capital, BlackRock, Fidelity International and Gemsstock.

"Following the discussions, Ukraine received clear signs of support for the consent request regarding the Eurobonds, as well as amendments to the terms and conditions of the GDP warrants from the aforementioned group of owners," according to the ministry's press release.

The Finance Ministry said that the proposal was forwarded in order to maintain foreign exchange liquidity in the country and to reduce the existing monthly budget deficit of $5 billion.

The ministry has also noted that Ukraine's initiative complements the announced intention of Ukraine's international partners within the G7 and the Paris Club to approve the suspension of Ukraine's debt payments until the end of 2023, with the possibility of extending the deferment for another year.

"One of the operational goals of managing Ukraine's sovereign debt is to ensure that creditors receive equal treatment. Specifically, the G7 and the Paris Club of creditors have supported the proposal, as noted in their statement dated July 20, 2022," the Finance Ministry said.