Templeton agreed with Kiev on good terms - Moscow promised “the hard way”

Write-off of 20% of debt will help Ukraine avoid protracted, “Greek-style” talks with bondholders and give a breather against the backdrop of recession and armed conflict with separatists. Russia did not have representatives in the international committee of creditors, and has already stated that require the payment of $ 3 billion in December. Media are considering possible scenarios.

A rare phenomenon - the funds, bond holders and the shaky government of emerging markets have agreed to debt restructuring, notes in The New York Times Andrew Kramer: Ukraine and its major creditors agreed to write off 20% of its external debt to private creditors, part of $ 18 billion. Terms of the agreement will give Ukraine a break against the backdrop of recession and armed conflict with separatists.

“But it remains unclear whether there are to comply with these conditions the creditors who did not have their representatives in the committee of international creditors, who negotiated. The key question - how to behave in Russia”, - the author writes, explaining that the committee represented the interests of holders of 50% of the debt.

Large bonded investors to invest in Ukraine before the president was ousted Yanukovych. “The government of Yanukovych urged Franklin Templeton fund to buy bonds it”, although “at the same time Ukraine’s foreign policy was reoriented from the West to Russia, and the economy went downhill,” the article says.

Some investors believe that in any geopolitical situation or the IMF or Russia can help the public sector in Ukraine. But after the change of power, the Ukrainian government has asked creditors to write off 40% of the debt, threatening default. Investors offered to extend the maturity of debt, hoping for a quick recovery of the Ukrainian economy, but eventually agreed to a compromise.

Creditors who do not have representatives on the committee will have to decide whether they will join the agreement. “There are difficulties, as one of the major creditor is Russia. It is unlikely to convince the Ukrainian government’s argument that the agreement will free up money for the fighting army against separatists in the east of the country. It is possible prolonged litigation,” - says Kramer.

The agreement on the restructuring is unlikely to solve the broad economic problems of Ukraine, says journalist: inflation in the country stood at 60% in April and 55% - in July.

Kiev successfully bluffing. Trying to get written off almost $ 20 billion of debt, he learned to be nice to put pressure on partners,” - writes columnist German Tageszeitung. He then threatened to impose a moratorium on debt payments, then questioned the desire to integrate into the West, while the Ukrainian media have warned about a second Greece. As a result, the Kiev authorities “finished off” lenders.

That Kiev would do to free up financial resources? Increase unemployment benefits, scholarships for students or wages and pensions of civil servants? Or send them to the service of other loans, replenish foreign exchange reserves, will spend money on the war machine?

29 August 2015

The Ukrainian authorities disarmed the guards of the Kremenchug refinery
September 1 is 25% more expensive light: how to save

More reading: • New York Times: Ukraine does not want to follow the path of Greece and pay for loans »»»
Kiev demands from international creditors write off 40% of the Ukrainian debt.
• The Minister of Finance of Ukraine recognized the problems in negotiations with creditors »»»
Negotiations Ukrainian authorities with international lenders are "very difficult, more difficult than expected.
• Russia has refused to forgive the debts of Ukraine »»»
Russia still does not intend to restructure the debt of Ukraine at $ 3 billion, he told reporters, Deputy Finance Minister Sergei Storchak.
• The US Treasury has called on Russia to restructure the debt of Ukraine »»»
US Treasury Secretary Jack Lew called on Russia to accept the idea of ​​restructuring the debt of Ukraine, which will enable it to gradually become a solvent due to the development of the economy.
• "We are forced to!": In Ukraine explained why not want to give Russian debt »»»
The Minister of Finance of Ukraine Alexander Danyluk explained why his country does not intend to give the Russian debt.