The Ministry of Finance welcomes the vote today in the Rada that authorized the Government of Ukraine to decide on suspension of payments of state and state guaranteed debt to international commercial creditors.
As agreed with the IMF, the Government has engaged in negotiations with international commercial creditors as part of its debt operation to achieve the three following goals:
· Generate US$15.3 billion savings in public sector financing during the four-year IMF program
· Bring the public and publicly guaranteed debt/GDP ratio under 71% of GDP by 2020
· Keep the budget’s gross financing needs at an average of 10% of GDP in 2019–2025; maximum of 12% of GDP in any given year
In order to achieve these goals, Ukraine’s debt restructuring must include a combination of maturity extension, coupon reduction and principal reduction.
The Ministry of Finance is hopeful that a good faith collaborative solution can be found with Ukraine’s international commercial creditors and appropriate restructuring terms can be agreed rapidly. Otherwise, in order to defend the interests of the Ukrainian people, the Government may have to suspend payments of state and state guaranteed debt to international commercial creditors.
The Moratorium Law adopted today gives the Government of Ukraine the authority to suspend payments on certain external sovereign and sovereign guaranteed debt. This law demonstrates the seriousness of our difficult financial position and the need to rapidly conclude a debt operation that meets the three targets in our IMF Extended Fund Facility program. Any moratorium declared by the decision on the Government of Ukraine under the new law in the future would not affect our domestic, state banks, nor Ukrainian State Railways obligations.