MoF negotiations with creditors heats up

MoF negotiations with creditors heats up



13 травня 2015 года
ICU

Yesterday, Interfax-Ukraine reported that a letter in its possession from the ad-hoc committee of Ukraine's external creditors stated "a lack of real work in regard to the restructuring proposals [from Ukraine]". Click the following link to the Bloomberg article on this issue. In response, Ukraine's Ministry of Finance said that it reiterates the three pillars of its strategy and urges the creditors to agree on a sustainable debt level, achieve the debt service objectives, and fulfill the targets of the IMF supported program by this June. To read the full text, follow this link. In our view, this media outburst flames unnecessary controversy, muddling both sides' positions. Even more damaging, this news was sparked precisely on the day that the IMF mission convenes in Kyiv to assess the program's progress. As the external debt restructuring, codified as the "debt operation", is an integral part of the review, the creditors, represented by the ad-hoc committee that issued the letter, could pressure Ukraine's top negotiator, Minister of Finance Yaresko, to yield to their demands, namely to avoid a reduction of principal reduction, which would be self-defeating. We believe that an effective restructuring must include a reduction of both the coupon rate and the principal. Should this not occur, the unsustainable debt burden inevitably will force Ukraine to endure another round of debt restructuring, mainly to implement the crucial principal haircut.

Источник: ICU

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