KIEV, August 27. /TASS/. Ukraine has agreed with creditors on writing off $3.8 billion out of its $19.3 billion debt, Ukrainian Finance Minister Natalia Yaresko said ahead of a government meeting on Thursday.
"It was decided to reschedule the repayment of the remaining $15.5 billion to 2019," she said.
Ukraine had taken efforts since March 2015 to agree with creditors on the restructuring of payments under its Eurobonds worth $20 billion.
The media reported early this week that the Ukrainian government and the creditors’ committee had agreed on writing off 20% of the Eurobonds’ value.
Initially, the Ukrainian side insisted on writing off twice as much, i.e. 40% of its debt. A 20% debt write-off means that Ukraine will save $3 billion on debt repayment.
If the Ukrainian government had not agreed with the creditors, Kiev could have imposed a moratorium in September on debt repayment. Kiev will have to repay Eurobonds worth $500 million already on September 23. This would have automatically worsened the prospects for Ukraine to repay its $3 billion debt to Russia in December. Russia has said on many occasions that Ukraine should redeem its $3 billion Eurobond on schedule.
Under an agreement with the International Monetary Fund (IMF), Kiev needs to save more than $15 billion over four years, including $5.2 billion this year.
Ukraine, which had been holding negotiations with foreign private creditors on restructuring bonds worth about $20 billion at their face value, warned on many occasions it might impose a moratorium on foreign debt repayment, if creditors failed to agree to restructuring, including a principal debt write-off.
In turn, creditors insisted that Ukraine would be able to comply with the debt burden parameters agreed with the IMF without the principal debt write-off and offered only a 10-year debt payment postponement.
Ukraine’s total state and state-guaranteed debt amounts to $70 billion today.