Ukraine is committed to transparency, responsiveness and good faith in debt negotiations

The Ministry of Finance of Ukraine is concerned about the approach taken by the creditors’ committee representing the country’s external debtholders and their lack of willingness to engage in negotiations. An alternative to a negotiation cannot be in the interests of the bondholders.

The Ministry is determined to negotiate with the debtholders in a process which fully respects the commonly accepted principles of transparency, responsiveness and good faith.

 1.       Transparency

Immediately after presenting the goals of the debt operation on March 13, the Ministry of Finance encouraged the debtholders to form a creditors' committee to start a collaborative process in accordance with IIF principles. Despite numerous requests from the Ministry’s side, the committee refuses to reveal its membership, a highly unusual departure from standard practice in similar situations, and in stark contrast with IIF transparency and disclosure principles.

2.       Responsiveness

Minister Jaresko flew to the U.S. and the UK to meet with the largest debtholders after March 13. There have been numerous contacts and meetings between the Ministry’s advisors and the advisors to the ad hoc committee. Minister Jaresko proposed last week to speak directly with the one known committee member to accelerate and focus negotiations but was told that it was unavailable to talk to her.

 3.       Good faith

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 Ministry is also concerned that instead of engaging directly in constructive negotiations, the committee chooses to communicate unconstructively through the media.

Ukraine and its debtholders need to agree on a sustainable debt level and debt service objectives meeting the targets of the IMF supported program by June. The Ministry remains convinced that a deal can be reached and that it is in the best interests of all parties to do so to ensure the country’s financial stability and debt sustainability. The Ministry is committed to transparency, responsiveness and good faith negotiations and expects the creditors’ committee to do the same.

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