Ukraine receives new deferment of national debt payments from G7 country creditors and Paris Club
MOSCOW. Dec 22 (Interfax) - Ukraine signed an amendment to the memorandum of understanding on the suspension of payments on its national debt with a group of creditors from the G7 countries and the Paris Club dated September 14, 2022.
The Ministry of Finance of Ukraine said that the changes provide an extension of the suspension of payments until the end of March 2027. "Achieving today's agreement on the revision of debt obligations allows us to reduce the burden on the budget until the end of the IMF program and save foreign exchange liquidity to ensure social spending," Ukrainian media said citing the Finance Minister Sergei Marchenko as saying.
He said that this suspension of government debt payments is part of a package of international support worth $122 billion provided under the Extended Financing Facility (EFF) for Ukraine for 2023-2027.
The document was signed by the governments of Canada, France, Germany, Japan, the United Kingdom and the United States.
Marchenko also said it was important to preserve financial resources, in particular, by providing Ukraine's external private creditors with the most acceptable debt conditions until the end of the debt service suspension they provided starting in August 2022.
The Ministry of Finance of Ukraine previously said that negotiations with commercial creditors on a new restructuring plan are expected to start at the beginning of next year, with a view to completing them no later than mid-2024.
It was also reported that a group of Ukraine's creditors, consisting of Canada, France, Germany, Japan, the United Kingdom and the United States, announced on July 20, 2022 the suspension of servicing Ukraine's national debt until the end of 2023, and then later called on holders of Ukrainian Eurobonds to accept the country's offer for a two-year deferment of payments.
The four-year $15.6 billion EFF program was approved in March of this year; the first $2.7 billion tranche was allocated to Kiev in early April, and the second, worth $890 million, in early July. The third tranche of $881 million is expected soon. Three more tranches will be provided in 2024: $2.2 billion in mid-June, then $1.1 billion each in early September and December.
The International Monetary Fund, in its second review of the EFF extended financing program for Ukraine, again included a potential negative scenario based on the continuation of hostilities throughout 2025. The assessment of Ukraine's public debt in the negative scenario at the end of next year shifts from 96.7% of GDP to 111.5% of GDP, and at the end of 2025, from 98.5% of GDP to 126.7% of GDP compared to 87.1% of GDP by the end of this year.