Ukraine’s international creditors agreed on Wednesday to suspend debt repayments until the end of next year, giving the country breathing room to continue to fend off Russia while avoiding a default.
The decision followed a request from Ukraine’s government, which is facing an economic crisis five months after Russia’s invasion. The group of creditors, which includes Britain, Canada, France, Germany, Japan and the United States, also urged Ukraine’s private-sector bondholders to show similar flexibility.
“In these exceptional circumstances, and acknowledging Ukraine’s exemplary track record of honoring debt service to date, the members of the Group of Creditors of Ukraine support this consent solicitation and strongly encourage bondholders to consent to Ukraine’s request,” the creditors said in a statement.
Ukraine’s ministry of finance said on Wednesday that it had been in touch with investors such as Amia Capital, BlackRock and Fidelity International about its debt management plans and that they had been supportive of its proposals.
“Despite the war started by Russia, Ukraine has continued to service its debt obligations and the Ministry of Finance has remained actively engaged in communications with the investment community,” Serhiy Marchenko, Ukraine’s finance minister, said in a statement. “We have received many words of support from investors as well as constructive ideas as to how to preserve liquidity for the country.”
He added, “It is important for us to create the conditions for Ukraine to regain access to international financial markets in the shortest possible time after the victory on the battlefield.”
The war has taken a severe toll on the economies of Ukraine and Russia.
Last month, Russia missed a deadline for making bond payments, a move signaling its first default on international debt in more than a century, after Western sanctions thwarted the government’s efforts to pay foreign investors.