Default is off the agenda, for good / Photo from UNIAN
The agreement on restructuring of Ukraine’s public debt, reached between the government and the ad hoc creditors' committee on August 27, will not scare off strategic investors ready to take part in privatization process, Aivaras Abromavicius, Ukraine’s Minister of Economic Development and Trade, has told in an exclusive interview with UNIAN.
"In the process of reforming our business environment and improving the investment climate, in the course of large-scale privatization, we count on strategic investors with direct investments,” said Abromavicius.
“These investors actually build factories, businesses, create new jobs. These investors do not depend on our debt,” the minister said. “Of course, they are aware of this factor. But they rather believe that the higher the debt of the country, the more obvious fluctuations in the exchange rate, for example, or the likelihood of inflation shocks. Therefore, by reducing debt and delaying payments, we stabilize macroeconomic situation and help any strategic investor – the one who is already here or the one to come. Now the macroeconomic situation in Ukraine is more defined than, say, some time ago, when pre-default sentiments were very strong. Now default is off the agenda, for good."
According to Abromavicius, restructuring is a positive thing, since it will secure significant savings - about 5% of GDP. This, in turn, will play for the benefit of macroeconomic stability and increase the confidence of strategic investors willing to participate in Ukrainian privatization.
Read alsoCabinet asks Rada to greenlight privatization of Ukrspirt, Artemsil and another 372 SOEsThe minister stressed that the fact that the restructuring of the national debt is Ukraine’s success.
"It's definitely a success. Two weeks into my appointment in December last year, I traveled to London to meet with the unofficial club of friends of Ukraine. It includes economists, bankers, and politicians. I met with leaders of major banks that had their own vision of what to do with our country’s debt. Their estimates were very ambiguous,” the minister said. “Had we started negotiations in mid-December, we would not have secured the results we have today."
As UNIAN reported earlier, on August 27, Ukraine and the creditors' committee reached an agreement on the restructuring of the public debt, totaling $18 billion. The restructuring involves a complete write-off of $4 billion, deferral of payments on the body of the loan for four years, as well as the establishment of a single 7.75% interest rate for the bonds.