Ukraine debt discussions unsuccessful
(MENAFN) Ukraine's government announced on Thursday that it has been unable to reach an agreement to restructure approximately $2.6 billion in debt, raising the risk of a default if it cannot make a scheduled payment by the end of May. A group of GDP warrant holders engaged in discussions last week and continued talks during the International Monetary Fund and World Bank meetings in Washington this week. GDP warrants, a type of debt security tied to economic performance, are similar to bonds with payouts linked to the country's economic growth.
The talks reportedly explored a combination of cash and bonds to address the payment of around $600 million due on May 31. The holders involved included hedge funds Aurelius Capital Management LP and VR Capital Group. However, the Ukrainian government said it could not accept the proposal from the debt holders and would not make a counteroffer before the deadline.
The debt holders rejected Ukraine's proposal, stating it lacked approval prospects and did not provide a foundation for further negotiations. Ukraine's Finance Ministry confirmed it would consider all options for restructuring the debt in line with its agreement with the IMF.
With the end of May approaching, Ukraine now faces the prospect of defaulting on the $600 million payment linked to its 2023 economic performance. The IMF has warned that an unresolved dispute over the GDP warrants could hinder broader debt restructuring efforts and jeopardize Ukraine's $15.6 billion aid program.
The failed talks come as Ukraine's reliance on foreign financial aid increases, with the government planning to secure $37 billion in loans to cover its budget, which faces a predicted 75% deficit in 2025. The situation is further complicated by US President Donald Trump suspending all foreign development assistance programs, including aid to Ukraine, shortly after taking office in January
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