Ukraine’s debt shrinks by $9 billion after restructuring
Ukraine has completed debt restructuring and settled payments for 13 issues of government and state-guaranteed Eurobonds, the Finance Ministry announced on Sept. 4.
The restructuring was done to ensure debt sustainability, maintain macro-financial stability, and increase budget resources. Ukraine exchanged 13 issues of government bonds and one issue of Ukravtodor (state-run road construction company) Eurobonds, amounting to approximately $20.5 billion, for eight new series of Eurobonds with a nominal value of $15.2 billion.
“As a result of this deal, Ukraine's state and state-guaranteed debt has been reduced by about $9 billion,” the Finance Ministry stated.
“This represents a nominal reduction in debt value by 37% from the first day of the agreement's implementation and a decrease in the net present value of the debt by about 60% (at a discount rate of 14%). This is one of the largest debt write-offs in recent sovereign debt restructurings.”
Debt payments will decrease by 93%, saving Ukraine $11.4 billion over the next three years. By 2033, servicing and principal payments on the debt will be reduced by 77%, enabling total savings of $22.8 billion.
Yuriy Butsa, the government commissioner for public debt management, stated that "critical resources will be directed where they are needed most — security and defense."
The ministry added that the restructuring agreement aligns with the IMF's debt sustainability goals and has been approved by the G7.
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