Roman Olearchyk in
Kiev and Elaine Moore in London
Ukraine’s $23bn debt restructuring negotiations appeared to reach boiling point late on Tuesday after the government issued
a sharply worded statement that questioned the transparency, responsiveness and
good faith of a creditors’ committee.
With positions
hardening weeks before a planned June deadline to avoid default, the finance
ministry of war-torn and recession-battered
Ukraine in the statement
said it was “concerned about the approach taken by the creditors’ committee
representing the country’s external debt holders and their lack of willingness
to engage in negotiations.”
Claiming that the
creditor committee refused “despite numerous requests” to reveal its
membership, the finance ministry stressed that it and debtholders needed by
June “to agree on a sustainable debt level and debt service objectives meeting
the targets” of an International Monetary Fund programme granted earlier this
year.
“The ministry is
committed to transparency, responsiveness and good faith negotiations and
expects the creditors’ committee to do the same,” Kiev added.
The tough words
come amid increasing market expectations that the restructuring talks are
likely to stretch on through the summer as Ukraine continues — in the face of
creditor disapproval — to demand a haircut, cuts to the coupon and maturity
extensions to free up $15bn over the next four years.
Reaching that
target is part of a broader $40bn assistance program that includes a $17.5bn
IMF loan and some $7.5bn in bilateral assistance.
Negotiations
between international investors and the government appear to have reached
deadlock, with a group of the country’s largest investors declaring earlier on
Tuesday that they were “ready and willing to support a prudent debt
restructuring with Ukraine” but had had “no substantive engagement” from the
government.
Ukraine in its
Tuesday statement said finance minister Natalie Jaresko “proposed last week to
speak directly with the one known committee member to accelerate and focus
negotiations but was told that they were unavailable to talk to her”.
The ministry
added: “Even though Ukraine and the IMF have repeatedly said that the three
targets for the debt operation (liquidity, sustainability and payment capacity)
have to be met, the committee in its public statements focuses exclusively on
the liquidity aspect, and refuses to acknowledge the debt sustainability
objective.”
The committee of
creditors declined to comment on the finance ministry statement.
International
holders of Ukrainian debt, which include US investor Franklin Templeton, say
there is little point in setting final terms for a debt restructuring while the
country is fighting a war and its economic situation is in a state of flux.
They disagree with Kiev’s insistence that the only way for Ukrainian debt to
become sustainable is through a haircut for investors.
Bondholders are
promoting an alternative solution that would involve granting an extension to
upcoming debt payments.
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