In exchange for this Ukraine offered VRI-series treasury securities to creditors, which will be emitted in 2021.
Ukraine made an agreement with the main creditors about writing off 20% of the debt, which will allow to lower the sum of the debt for $3,6-3,8 bln, reported the Cabinet of Ministers.
"Ukraine has reached the agreement with creditors committee on the most profitable conditions, thay could ever hope for. The agreement included almost all instruments, which was announced for restructuring” – commented Nataliya Yaresko, the finance minister.
This agreement will allow lowering the demand for foreign debt funding to 10% GDP.
Apart from that, creditors agreed on deferral of loan payments till 2019, and rise in interest rate due to the warrant to 7,75%. Warrant payments will be made according to the schedule.
Agreements, that have been reached, allow lowering the ratio of government debt to gross domestic product for 4.3%.
However Ukraine has to pay the commercial debt, which is equal to $15, 5 bln.
In exchange, Ukraine offered VRI-series treasury securities to the creditors, which are going to be emitted in 2021. Payments for these securities will be made only if growth of the real GDP will exceed 3% per annum, and also GDP will be more than %125,4 bln. Securities rate will be 15% per annum from the percent of GDP growth divergence. In case, if GDP growth would exceed 4%, creditors are going to get 40% from the price of the each percent of this growth. If GDP would reach $125,4 bln, and growth would be less than 3%, Ukraine won`t make any VRI payments.
Also payments for VRI-series securities in 2021-2025, won`t exceed 1% from GRP.
"It is a win-win decision. The instrument makes creditors very interested in our rampant development” – said Nataliya Yaresko
Arseniy Yatsenuk, the prime minister of Ukraine, announced that $3,8 bln, that have been saved, will be used for social standards` escalation and consolidation of defensive capacity. “People need to feel, that successful restructuring will affect all families” – added prime minister.
It bears reminding that, Ukraine has been carrying the negotiations with foreign private creditors about Eurobonds restructuring with a total nominal value of approximately $20 bln. Kyiv has constantly warned against the possibility of freezing of foreign debts payments, if creditors wouldn`t agree on restructuring, which includes the 40% chargeoff of the main sum of the debt. However in July 2015, creditors agreed to write off only 5% of the debt.