Ministry of Finance Welcomes Adoption by Verkhovna Rada of Draft Law, which Facilitates Restructuring of External Debt Obligations

4/12/16

The Ministry of Finance welcomes the adoption by the Verkhovna Rada of Draft Law No. 3677 that will prolong the validity term of the law adopted in May 2015, which provides grounds for the introduction of temporary suspension of payments under certain external debt obligations. This step will facilitate the restructuring of external debt obligations.

The Ministry of Finance is actively working on the recovery of the public finance system and on the reduction of the debt burden on the state budget. For this purpose, last year the Ministry of Finance successfully implemented the restructuring of 13 out of 14 series of sovereign and sovereign-guaranteed Eurobonds within the perimeter of the sovereign and sovereign-guaranteed debt restructuring. Therefore, currently more than U.S.$19.4 billion out of the total amount of the external debt obligations of Ukraine have already been restructured. At the same time, the issues regarding the restructuring of U.S.$3 billion sovereign notes due in December 2015 and the sovereign-guaranteed debt of Ukravtotor amounting to U.S.$100 million have not been settled.

The Ministry of Finance is trying to reach an agreement with creditors under these external debt obligations that will allow achieving targets of the restructuring established under the IMF-supported Extended Fund Facility Programme for Ukraine. At the same time, during negotiation of the restructuring of these debt obligations, in December 2015 the Government was forced to introduce temporary suspension of payments under such debts according to the Law of Ukraine “On Certain Aspects of Transactions with Sovereign Debt, Sovereign-Guaranteed Debt and Local Debt”.

Taking into account that the validity term of the Law of Ukraine “On Certain Aspects of Transactions with Sovereign Debt, Sovereign-Guaranteed Debt and Local Debt” expires on 1 July 2016, the Ministry of Finance initiated the cancellation of the final effective date of this law, which will provide Ukraine with sufficient time for the restructuring of the said external debt obligations. If the holders of sovereign notes allegedly due in December 2015 and the creditor under Ukravtodor’s sovereign-guaranteed loan agree to restructure the said debt obligations, the temporary suspension of payments under the respective debt obligation will be terminated on the date of the respective restructuring transactions and the change of terms of the respective debt obligation.

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