Ukraine possibly to announce default

(MENAFN) According to The Economist, Ukraine faces the looming possibility of defaulting on its substantial debts as early as next month if it fails to secure a restructuring agreement with its creditors. In February 2022, major bondholders such as BlackRock, Pimco, and Amundi granted Ukraine a two-year debt moratorium due to its conflict with Russia. However, this agreement is set to expire in August, prompting creditors to press for the resumption of debt repayments.

The financial arrangement represents a significant portion, equivalent to 15 percent of Ukraine’s annual GDP. Had payments been required, they would have ranked as Kiev’s second-largest expenditure category after defense. The ongoing conflict with Russia has severely impacted Ukraine's economy, causing a contraction of 25percent since hostilities began.

Despite substantial support from Western nations, which primarily includes military aid and earmarked funds rather than direct cash, Ukraine's debt-to-GDP ratio is projected to reach 94 percent by year-end. The article notes that while the International Monetary Fund (IMF) is interested in negotiating a debt relief plan, achieving such an agreement within the available timeframe appears unlikely.

Last month, Ukraine failed to reach consensus with a consortium of foreign investors regarding the restructuring of its USD20 billion Eurobond debt. Kiev has been advocating for creditors to accept significant debt write-offs as part of its efforts to comply with IMF requirements for restructuring and to maintain access to global financial markets.

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