Default is getting closer: Ukraine has not yet managed to achieve a deferment of debt payments
Kiev
Negotiations to defer payments on Ukraine's sovereign debt appear to have failed. On Tuesday, the Ministry of Finance and a group of Ukraine's creditors, led by the Franklin Templeton fund , blamed each other for the breakdown in the talks, Bloomberg reports.
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Ukraine, the Financial Times reports , is seeking a restructuring of its $23 billion public debt. The government, represented by Natalia Yaresko, the American-born Treasury Secretary, is leading the negotiations.
Ukraine needs debt restructuring for a dual purpose: avoiding default and the possibility of obtaining another loan from the IMF.
Ukraine's Finance Ministry said late Tuesday that it was "concerned by the approach taken by the creditors' committee."
Failure to restructure the debt before June of this year will cast doubt on the receipt of money from the IMF. The Fund set a condition under which the loan received from the Fund should not be used to repay external debts.
Jaresko's harsh words towards creditors came amid growing market expectations that restructuring negotiations are likely to last throughout the summer. In the meantime, negotiations between international investors and the government have reached a dead end.
The creditor group said it was “ready to support a reasonable debt restructuring with Ukraine” but was not receiving “any significant participation” from the Ukrainian government. That is, Yaresko accuses creditors of refusing to participate in negotiations, and the creditors themselves blame Yaresko for this.
International holders of Ukrainian debt insist that a complete restructuring is impossible and offer their own scenario. Jaresko announces a complete review of the sovereign debt.
Default looms : Ukraine has yet to secure a debt repayment deferral.