Ukraine to Apply for Moratorium on the 20th

Plan to Request 2-Year Payment Deferral from Overseas Private Investors for 3 Billion Euro Project

Sergii Marchenko, Ukrainian Minister of Finance
Photo by AFP Yonhap News

[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 19th that Ukraine plans to apply for a moratorium (debt payment suspension notice) targeting overseas private creditors on the 20th (local time).

The Ukrainian government passed a plan on the 19th to request a two-year repayment deferral on Eurobonds worth 3 billion euros, and on the 20th, the Ukrainian Ministry of Finance is expected to officially request a moratorium from overseas private creditors.

Ukraine has emphasized that it will faithfully fulfill its debt repayment obligations and maintain trust with the international community. However, as the war prolongs, it appears to have ultimately reached its limit.

Oleh Ustenko, economic advisor to Ukrainian President Volodymyr Zelensky, is reported to have advised that declaring a moratorium would be beneficial. Advisor Ustenko reportedly stated that considering the war has continued for five months with no end in sight, it should be expected that raising capital in overseas markets will become more difficult next year or the year after, thus necessitating such measures.

Since February 24, the Ukrainian government is known to have repaid about 1 billion dollars to overseas creditors. It is also interpreted that the need to repay a large debt of 1.4 billion dollars on September 1 was taken into account in this situation.

Ukrainian Finance Minister Serhiy Marchenko said in an interview that there is no immediate need to worry about a financial crisis. He explained that although the fiscal deficit is increasing by about 5 billion dollars monthly, Ukraine has received 4.4 billion dollars in support from the West. However, he noted that in July, the support amount is expected to drop below 4 billion dollars due to delays in the disbursement of 9 billion euros promised by the EU.

The Ukrainian government is considering measures such as depleting foreign exchange reserves or increasing the money supply in case Western support proves insufficient.

Minister Marchenko said, "During wartime, it is common for the central bank to issue currency to temporarily write off government debt, but relying on this method in the long term is very risky," and added, "The International Monetary Fund (IMF) must agree to new bailout funds worth billions of dollars." He further stated, "Ukraine is ready to discuss new bailout funds, and I believe the IMF will be positive about the discussions," adding, "I think negotiations can be expedited."

Finance Minister Marchenko said that while the government needs to reduce spending, it is difficult because war expenses are high during wartime.

Locally, there are warnings that if the central bank continues to intervene in the foreign exchange market to prevent the hryvnia's value from falling, foreign exchange reserves could drop to a dangerous level. Minister Marchenko did not comment on policies related to the foreign exchange market but stated that the government is considering raising import tariffs to maintain the level of foreign exchange reserves.

This content was produced with the assistance of AI translation services.