A long-awaited plan to help Ukraine rebuild using Russian money is in limbo as the United States and Europe struggle to agree on how to construct a $50 billion loan using Russia’s frozen central bank assets while complying with their own laws, the New York Times reported. The fraught negotiations reflect the challenges facing the Group of 7 nations as they attempt to push their sanctions powers to new limits in an attempt to punish Russia and aid Ukraine. American and European officials have been scrambling in recent weeks to try to get the loan in place by the end of the year.
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Ukraine
Ukrainian officials are preparing for the International Monetary Fund this week to push it to devalue its currency faster, cut interest rates and strengthen its tax-raising efforts to fill the country’s budget gap, Bloomberg News reported. IMF staff visiting Kyiv are expected to pressure the war-torn country to pursue those steps to continue receiving financial support, as they undertake a scheduled review of a $15.6 billion loan program, Ukrainian officials with the knowledge of the topic said after preliminary discussions with the fund.
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Ukraine received widespread support from private creditors to restructure its overseas bonds, allowing the nation to secure much-needed debt relief to finance its fight against Russian aggression, Bloomberg News reported. The agreement more than two years after Russia’s invasion marks a swift resolution of the debt revamp following two rounds of negotiations in June and July, in which Kyiv asked bondholders to accept bigger losses than they initially aimed for.
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Despite all its recent freight growth and international expansion plans, Ukrainian Railways now finds itself in a problematic situation, railtech.com reported. The Ukrainian operator says that it is facing potential bankruptcy, after a number of companies have succeeded in annulling a 2021 rail tariff hike via a Kyiv court. Ukrainian Railways announces that it is now in troubled waters, according to a post on its Telegram channel. “Private companies using the courts are trying to reduce tariffs for themselves, which will cause the bankruptcy and shutdown of Ukrainian Railways,” it says.
Ukraine has made a payment of about $200 million to holders of its GDP warrants, securities that weren’t part of a recent $20 billion eurobond restructuring agreement with private creditors, the finance ministry said, Bloomberg News reported. The payment comes after the finance ministry said in a statement in July that it intended to pay a consent fee in early August linked to $2.6 billion of outstanding warrants, as well as a deferred payment on the notes from 2021.
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Ukraine struck a deal with creditors that could save it more than $11 billion over the next three years, a boost for the war-torn country as it scrambles to keep funding the war with Russia, the Wall Street Journal reported. The preliminary deal, unveiled Monday, came after months of contentious negotiations with a committee representing Western bondholders such as BlackRock and Pimco, which had balked over how much debt relief Ukraine and its Western backers were requesting.
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Ukraine and its international bondholders started a new round of official talks on restructuring more than $20 billion of debt as Kyiv is running out of time to reach an agreement or face the risk of a potential default, Bloomberg News reported. The east European nation, fighting against Russian aggression, is under pressure to agree a debt overhaul with its creditors as a freeze on payments — agreed two years ago after Moscow’s full-scale invasion — is set to expire on Aug. 1.
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The International Monetary Fund cut its growth forecast for Ukraine, as Russian strikes on its power infrastructure drag on the nation’s economy, and said talks with bondholders are “intensifying” as a repayment deadline nears, Bloomberg News reported. That outlook came alongside the Washington-based lender’s final approval Friday to release $2.2 billion from Ukraine’s $15.6 billion aid package, an expected step after agreeing to terms late last month. This is the fifth tranche Ukraine has received under the program since it was established in 2023.
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The first formal talks on restructuring more than $20 billion of Ukraine’s international bonds ended without a deal as the creditors pushed back against Kyiv’s proposal for debt relief, Bloomberg News reported. With bond payments set to resume this summer, Ukraine is asking debt holders to accept bigger losses that would allow it to finance its defense efforts against Russian aggression and prepare financial resources for economic reconstruction once the war ends.
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Ukraine's central bank lowered its key rate to 14.5% from 15% in a surprise cut on Thursday, citing slowing inflation, a stable situation on the currency market and lower risks linked to international financial aid for Kyiv, Reuters reported. Most analysts and bankers had expected the central bank to keep the main interest rate steady. The rate was cut to 15% in December. "The easing of interest rate policy will support economic recovery, without threatening macrofinancial stability," the central bank said in a statement.
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