Ukraine’s woes deepen as Russia rejects debt write-off

RUSSIA has refused to accept the terms of a private sector debt write-down agreed between Ukraine and its creditors after months of international wrangling.

Kiev announced it had struck an agreement for a 20pc haircut and a four-year maturity extension with a committee of its largest private creditors over $18bn of government debt.

Ukraine has been battling to meet the terms of its International Monetary Fund bail-out, which requires it to secure relief on its $72bn debt mountain in return for further rescue cash for its war-ravaged economy. The government has previously called on its creditors to accept a 40pc write-down.

But the terms of the deal – which would alleviate its debt costs by around $3.6bn – were immediately rejected by Moscow.

Russia holds $3bn in eurobonds and has maintained it will be paid back in full when the debt matures at the end of the year. Moscow’s acting finance minister, Anton Siluanov, said the country would not be part of the restructuring.

Ukraine’s finance minister, Natalie Jaresko, urged Russia, which annexed part of the Crimea region last year, to accept the conditions.

“I’m offering Russia a restructuring opportunity that is the same as everyone else’s,” she said. “I’m hopeful they will participate in this. It’s the best way to depoliticise this. It’s the best way for us to all move forward together.”

Ukraine’s economy has been decimated by its conflict with the Kremlin. The country has lost a fifth of its economic output and seen its debt rise to unsustainable levels and its currency collapse by more than 60pc against the dollar. As fighting rages on with proRussia separatists in the east, GDP is set to contract a further 8pc this year – the worst of any economy in Europe, the Middle East and Africa.