Zelenskyy suspends Ukraine's foreign debt payments until October
Ukrainian President Volodymyr Zelenskyy (Photo:Presidential Office)
Ukrainian President Volodymyr Zelenskyy has signed law No. 11396, which allows the government to suspend payments on external public debt until October 1. The document was posted on the parliament's website on July 31.
The law also grants the government the authority to assume the state-guaranteed debt of the former State Agency of Motor Roads (Ukravtodor), totaling $700 million plus interest. This decision was made because the State Agency for Infrastructure Restoration and Development was unable to restructure these obligations independently.
Ukraine had previously imposed a freeze on foreign debt payments after Russia's full-scale invasion. This freeze expires on August 1, with the bonds' coupon payment due in 2026. The government needs to restructure the debt to meet the International Monetary Fund's (IMF) requirements under a $15.6 billion program. Approval has been obtained from the IMF and Ukraine's bilateral creditors, including the United States and the Paris Club.
In July 2024, Ukraine reached an agreement with some of its private creditors to restructure more than $20 billion of its international debt, potentially helping the country avoid default. The agreement includes nominal losses of 37% of assets on 13 bonds, waiving claims worth $8.67 billion, and would save Ukraine $11.4 billion over the next three years.
“After the completion of this restructuring, Ukraine will also be able to return to the market as soon as possible, once the security situation stabilizes, which will allow to finance the rapid recovery and reconstruction of our country,” said Finance Minister Serhiy Marchenko.
The deal needs approval from two-thirds of all bondholders to be completed.
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