Crucial debt talks in Ukraine strike a fresh stumbling block
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.