Ukraine's group of creditors ready to extend grace period for its debt, Kiev to negotiate new restructuring with commercial creditors

MOSCOW. March 27 (Interfax) - After a meeting with representatives of the International Monetary Fund (IMF) and the World Bank on March 23, the group of creditors of Ukraine (GCU) provided financial guarantees for a new IMF-supported Extended Fund Facility program for Ukraine, IMF Deputy Executive Director Vladyslav Rashkovan said.

"The provision of financing assurances by the GCU entails an extension of the standstill from August 1, 2022 over the period of the IMF program (2023-2027). An additional debt treatment to restore debt sustainability, once the situation is stabilized or at the latest by the end of the IMF program (2027)," Ukrainian media quoted his post on social media.

The group of creditors said in its statement it would extend the grace period provided that private external creditors deliver a debt treatment at least as favorable.

"Finally, the Group urges all other official bilateral creditors to swiftly reach an agreement with Ukraine on a debt treatment at least as favorable," the statement said.

For his part, the Ukrainian representative in the IMF said on March 24 the Ukrainian authorities made a statement that after evaluating a number of alternative scenarios for the implementation of the necessary debt treatment, the government undertakes to take measures to manage Ukraine's public external debt.

"The goals will be (i) to restore Ukraine's debt sustainability; (ii) to preserve liquidity and reduce Ukraine's financing gap during the program period," Rashkovan said.

"The Ukrainian authorities will assess a number of alternative scenarios for implementing the necessary debt treatment in order to maximize the efficiency and success of the process, being mindful of the objective to restore Ukraine's market access as early as practicable. The Ukrainian government has retained financial and legal advisors to support this process," the Finance Ministry was quoted by the media as saying in a statement on its website.

Talks with commercial creditors are expected to begin in early 2024, the ministry added.

As reported, on March 21, the IMF said that it had reached a staff-level agreement (SLA) on a new four-year EFF program for Ukraine worth SDR11.6 billion (about $15.6 billion).

National Bank of Ukraine Governor Andrei Pyshny expects it to be approved by the IMF Board of Governors by the end of March.

On July 20, 2022, a group of Ukrainian creditors consisting of Canada, France, Germany, Japan, the United Kingdom and the United States announced a suspension of servicing Ukraine's state debt until the end of 2023 and called on the holders of Ukraine's Eurobonds to accept the country's proposal to provide a two-year grace period for their payments, which took place a little later.