The budget committee of the Verkhovna Rada proposes to suspend payments on foreign debt until the restructuring is completed

The Budget Committee of the Verkhovna Rada recommended that the Parliament adopt draft law No. 11396-1, which provides for emergency measures to manage the public debt and gives the government the right to temporarily suspend payments on the external debt until the restructuring negotiations are completed. About this reported head of the committee, Roksolana Pidlas.

She noted that draft law No. 11396-1 includes two main norms:

Inclusion of Ukravtodor’s debt in the state debt. This will allow the government to take over the state-guaranteed debt of the former Ukravtodor and carry out its restructuring. We are talking about Eurobonds of 2021 in the amount of 700 million US dollars plus interest. The recovery agency is currently unable to carry out such restructuring on its own, which creates a risk for the state budget.

Suspension of payments on foreign debt. The draft law gives the government the right to temporarily suspend payments on external public debt if necessary. This applies if a formal restructuring agreement is not reached by August 10, when the coupon payments for one of the government Eurobond issues maturing in 2026 are due.

Podlasa noted that a similar approach was already used in 2015, when Ukraine adopted the law “On the Peculiarities of Transactions with State, State-Guaranteed Debt, and Local Debt.” Then we reached an agreement in principle with the investors in August and completed the operation in November.

“The IMF supports this draft law, as it will contribute to strengthening Ukraine’s debt sustainability, which is our obligation under the Memorandum with the IMF.” – said Podlasa.

She also emphasized that the committee will ask the Verkhovna Rada to support this project at the next plenary meeting, because it is a key element of the restructuring that will save more than 10 billion US dollars on servicing and repaying sovereign Eurobonds by the end of 2027.