Under pressure on multiple fronts, its power plants and energy grids under relentless attack, Ukraine looking for a peace deal that would avoid permanently losing 20 percent of its former territory, and Ukraine is also under financial strain, with worrying news emerging about debt restructuring efforts.
The Economist reports that Kiwoom could default on its massive debt repayments as early as next month if it fails to reach a restructuring deal with its creditors.
When the war broke out in February 2022, creditors granted Ukraine a two-year debt freeze. That agreement expires in August, and creditors expect Ukraine to start paying interest on its debt again.
RT reported:
“The deal represents 15 percent of Ukraine's annual GDP, meaning that if it had been required to be paid, it would have been Kiev's second-largest spending item after its defense budget.
The conflict with Russia has hit Ukraine’s economy hard, with its economy shrinking by a quarter since hostilities began, the outlet reported. Kiev’s debt-to-GDP ratio is expected to reach 94% by the end of the year despite “impressive” Western aid, which the article said came mostly in the form of “artillery, tanks and specific funds, not cash.”
READ: Zelensky's paranoia: Ukrainian president 'emotional, nervous', 'deeply anxious'; instructs officials to criticize Biden for skipping peace summit in Switzerland
Kyiv has failed to reach an agreement with a group of foreign investors to restructure its $20 billion eurobond debt.
“Ukraine wants to reduce its debt to 60% of its current value, but creditors say 22% is 'more reasonable'.
“If a new debt restructuring deal is not reached, Ukraine will eventually default on its debt, which will damage the country’s credit rating and complicate its ability to borrow in the future.”
Read: End of Ukraine? British newspaper The Times: 'It's time to talk about the fall of Kiev' – Zelensky: 'We are trying to find a way not to retreat'
The Economist reports that the Kyiv government could extend its debt freeze until 2027 or face default.
It is not expected that Ukraine will resume payments to its creditors in any way.
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