Ukraine has failed to reach an agreement with creditors and will miss a payment of $665 million on government debt related to so-called GDP warrants – debt obligations tied to economic growth rates. This is reported by Bloomberg.
On June 2, Ukraine would have to pay creditors $665 million on these obligations in connection with GDP growth in 2023. But today the Finance Ministry released a statement confirming the moratorium on these payments. The moratorium itself was introduced last year and will remain in effect until the restructuring of this debt is completed.
“The moratorium on payments on government derivatives is part of Ukraine’s broader strategy, announced in August 2024 during the restructuring of the government debt. This strategy provides for a fair and equal treatment of all creditor claims within the restructuring perimeter, with the aim of restoring debt sustainability under the IMF Program,” the Finance Ministry said in a statement.
At the same time, it is noted that Kyiv agreed with investors last year that a possible default on GDP warrants would not affect obligations under regular international bonds.
According to Bloomberg, the problem with GDP warrants is that they were not included in last year’s agreement to restructure Ukraine’s $20 billion debt.
In April, the Cabinet of Ministers of Ukraine held talks with warrant holders and offered to exchange them for sovereign bonds. However, investors were willing to restructure only the May payment in this way, demanding more than $400 million in cash and the conversion of more than $200 million into new bonds. The Cabinet of Ministers did not agree to this.
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