Cru­cial debt talks in Ukraine strike a fresh stum­bling block

The China Post - - INTERNATIONAL -

Ukraine and its cred­i­tors hit a new stum­bling block Wed­nes­day af­ter a new debt restruc­tur­ing of­fer from Kiev and call for a “decisive” fi­nal meet­ing drew only a luke­warm re­sponse.

Sources close to both Kiev and the four big com­mer­cial debt hold­ers told AFP that Ukrainian Fi­nance Min­is­ter Natalie Jaresko’s idea of hold­ing a po­ten­tially de­fin­i­tive meet­ing in Lon­don on Thurs­day may have to be pushed back.

The cash-strapped for­mer Soviet na­tion must strike a debt restruc­tur­ing agree­ment be­fore it is due to make prin­ci­pal and in­ter­est pay­ments of more than US$500 mil­lion on a Eurobond ma­tur­ing on Sept. 23.

Franklin Tem­ple­ton and three other U.S. fi­nan­cial ti­tans own about two-thirds of the debt upon which Ukraine is try­ing to find sav­ings of US$15.3 bil­lion over the com­ing four years.

That tar­get is part of a US$40bil­lion global pack­age the In­ter­na­tional Mon­e­tary Fund patched up to help Ukraine weather an eco­nomic im­plo­sion that is be­ing ex­as­per­ated by the pro-Rus­sian re­volt in its in­dus­trial east.

Jaresko’s of­fice sub­mit­ted Tues­day a re­vised of­fer to the bond­hold­ers that it said was “fully in com­pli­ance with the tar­gets of the IMF-sup­ported pro­gram.”

“This week will be decisive for the ne­go­ti­a­tions,” the Ukrainian fi­nance min­istry said.

The two sides have spent more than four months ar­gu­ing over how much of the bonds’ face value could sim­ply be writ­ten down due to Kiev’s ev­i­dent cash con­straints.

Ukraine had ini­tially sought a 40-per­cent cut. The main lenders this month came out with a counter-of­fer that would see a re­duc­tion of be­tween five and 10 per­cent of the as­sets’ orig­i­nal value un­der very strict terms.

It was not im­me­di­ately clear where the pos­si­ble mid­dle ground in the ne­go­ti­a­tions stood.

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