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Ukraine's default is unlikely even without debt restructuring, says Centre for Economic Strategy economist

Tuesday, 2 July 2024, 12:21
Ukraine's default is unlikely even without debt restructuring, says Centre for Economic Strategy economist
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Even if Ukraine fails to restructure its debt by August, a likely option for agreement with creditors would be a moratorium on payments rather than a default.

Source: Maksym Samoiliuk, an economist at the Centre for Economic Strategy

Details: He said it is crucial for Ukraine to negotiate a restructuring agreement that would allow either not paying private creditors anything in the next few years or minimising these payments to ensure defence funding is not jeopardised.

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Quote: "Agreements must be reached by August, and it should specifically be an agreement on restructuring, not just another suspension of debt payments, which is currently in effect – this is also our obligation to the IMF," he stated.

However, even if an agreement is not reached by then, a likely option is an agreed extension of the moratorium on payments with creditors for another year, rather than Ukraine defaulting.

Background:

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  • Ukraine has a month to reach an agreement with creditors on debt restructuring and avoid default. 
  • Ukraine informed investors that it still hopes to restructure its debt amid wartime conditions before the moratorium on payments ends on 1 August.

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