REUTERS
The International Monetary Fund says Ukraine will most likely fail to repay a $3 billion debt to Russia that was provided to Ukraine in the form of a bond purchase, and will include "Russian debt" in its overall external debt restructuring package, negotiations over which began on March 13.
According to the experts from UK newspaper The Financial Times, the loan program for Ukraine does not provide for the repayment of Russian debt in full.
"The government is conducting tough negotiations with international creditors regarding the restructuring of foreign debt worth $15 billion, which is part of the financial assistance package for the war-torn country,” The Financial Times writes.
“The IMF’s plan also involves cooperation with creditors to accept some sort of restructuring on their debt. This also includes Russia, which is due to be repaid a $3 billion bond in December. "
The IMF said that it had not made assumptions about specific debt restructuring measures.
"It is up to the Ukrainian authorities to determine the scope and kinds of debts to be included in the debt operation," the FT wrote.
As UNIAN reported earlier, the Ukrainian Finance Ministry first announced its plans to restructure part of Ukraine’s debt while discussing the new lending program with the International Monetary Fund. On March 11 the IMF approved a new bail-out for Ukraine worth $17.5 billion over four years, with the first tranche received by Ukraine on March 13.
Last week Ukrainian Finance Minister Natalie Jaresko held a conference call with creditors in which she explained that the country’s debt operations could require principal reductions on bonds as well as lower interest payments and extended maturities.
The amount of debt to holders of the government’s bonds totals about $17 billion. The amount of debt obligations due in 2015 is $11 billion. The total government debt amounts to $70 billion.
Ukraine is considering various restructuring options, including a substantial haircut on the debt, sources close to the negotiations have said. It is also suggested to include in the package of bonds for restructuring the securities of state-owned holdings Ukravtodor, Design Office Yuzhnoye, State Railways Administration Ukrzaliznytsya, and two state banks - Oschadbank and Ukreximbank – along with the bonds of Kyiv City State Administration. The Ukrainian side proposes to divide the securities into two groups and negotiate separately on each of them.
U.S. investment fund Franklin Templeton, as one of the major private holders of Ukrainian eurobonds, leads the group of creditors with which the Ukrainian government has started the restructuring talks. Creditors have noted that the talks are expected to be tough and problematic, particularly in light of the negotiations with Russia.
Moscow has already stated it would not agree to restructuring, but Finance Minister Jaresko has said that there will not be any special offers to individual creditors, including Russia.