Ukraine fails to secure debt write-off at US talks
Ukraine failed to convince its biggest creditors to significantly reduce its debt obligations during a ‘last chance’ two-day negotiation in San Francisco, California. The delegation from Kiev hoped to restructure some $19 billion in debt.
The Ukrainian delegation was headed up by Illinois-born Finance Minister Natalie Jaresko. Meanwhile, the creditors were represented by Franklin Templeton Investments, which holds about $8.9 billion worth of Ukrainian debt in the form of bonds.
The two sides said they had conducted “detailed discussions” in the city, but no progress has reportedly been achieved.
READ MORE: Creditors offer Ukraine 5% debt write-down – media
Even though there have been no official statements concerning the negotiations, Ukraine had previously asked for a 40 percent debt write-off, Bloomberg cited sources as saying. Reportedly, Franklin Templeton Investments was only willing to offer a 5 percent reduction to bond principal conditional on economic performance.
Ukraine described the talks near Templeton’s headquarters as the “final opportunity” to agree on something prior to next month’s due date for $500 million worth of bonds.
Even lobbying by influential US hedge fund billionaire George Soros, who recently had an article published in the Wall Street Journal titled ‘Ukraine Deserves Debt Relief,’ did not seem to make an impact.
In the piece, Soros argued that investors should stand behind Ukraine in its request for debt relief, which would help the country save some $15.3 billion in debt-servicing costs over the next four years as well as lower debt to below 71 percent of GDP by 2020. Ukraine must achieve those milestones if it hopes to take advantage of a proposed IMF bailout program.
The country’s GDP is expected to shrink 9 percent this year, with annual inflation expected to jump to 46 percent, the IMF has warned. The debt will hit 95 percent of GDP this year, according to the National Bank of Ukraine.
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