Ukraine

Ukraine has agreed a restructuring deal with Russia's Sberbank on $367.4 million of state-guaranteed debt, the government said in an online statement on Thursday, the Daily Mail reported on a Reuters story. The deal included a 25 percent writedown and maturity extensions to Sept. 1, 2019, it said. The debt of state-owned firms, Ukravtodor and Yuzhnoye State Design Office, was included in the external loans that Ukraine has sought to restructure under a $40 billion bailout programme coordinated by the International Monetary Fund.

The head of the International Monetary Fund warned that the lender’s bailout of Ukraine could be in jeopardy without “a substantial new effort” by the country to accelerate overhauls to improve governance and fight corruption, The Wall Street Journal reported. IMF Managing Director Christine Lagarde’s remarks on Wednesday underscore growing concerns in the West that Ukraine isn’t moving fast enough to make its recession-hit economy more competitive and root out graft.

Lenders of last resort are becoming agents of change for economies across the former Soviet Union, Bloomberg News reported today. Their governments paralyzed by collapsing revenue, central banks sprang into action when the crisis hit last year, allowing more flexible currencies to take root from Belarus to Azerbaijan.

Ukraine’s leaders pledged to put aside their differences and take measures to unlock loans from the International Monetary Fund, after weeks of squabbling strained the pro-Western coalition and delayed the latest bailout tranche, The Wall Street Journal reported. The statement, signed by the president, prime minister and chairman of parliament and released late Tuesday, tried to draw a line under infighting in the coalition.

The International Monetary Fund (IMF) will not get involved in the negotiations between Moscow and Kiev to restructure Ukraine’s debt to Russia, IMF Communications Department Director Gerry Rice said in a briefing on Thursday, Sputnik News reported. “We expect Russian and Ukrainian authorities to conduct direct discussions on this matter,” Rice stated.

In a related story, the Irish Times reported that Ukraine’s economy exited 1 1/2 years of recession last quarter, reaching a milestone toward what officials predict will be a drawn-out recovery. Gross domestic product rose a preliminary 0.7 per cent in July-September from the previous quarter, the State Statistics Office said Monday, buoyed by a modest industrial revival and relative peace in the nation’s east. The annual decline eased to 7 per cent from 14.6 per cent in the second quarter and as high as 17.2 per cent in the first.

Ukraine’s Western allies are preparing to accelerate planned changes to the International Monetary Fund’s lending policies to prevent Russia from stymieing the country’s $25 billion financial rescue package, The Wall Street Journal reported. Ukraine’s economy has suffered drastically over the past year or so, in large part due to a still-simmering conflict with Russia-backed separatists in the east. The Kremlin has rejected Ukraine’s invitation to participate in a debt restructuring, and Kiev has said it won’t be able to pay all of the $3 billion due to Moscow by the end of the year.

A legal fight is looming over a $3bn bond owed by Ukraine to Russia after Moscow refused to join other bondholders in a debt restructuring and both sides said they were prepared to take the matter to court, the Financial Times reported. Russia emerged on Thursday as the lone holdout in the $18bn restructuring deal offered by cash-strapped Kiev — involving a 20 per cent writedown on the value of its debt and extended repayments — which other private shareholders voted to accept.

The Fitch rating agency has cut Ukraine's foreign currency rating to restrictive default after Kiev failed to repay $500 million in Eurobonds on September 23. A ‘restrictive default’ Fitch rating indicates a failure to pay on a bond, loan or other material financial obligation without entering bankruptcy or ceasing operations. The Fitch’s downgrade comes after a similar move from Standard & Poor’s that downgraded Ukraine’s credit rating to 'selective default' on September 25.

Ukraine must resolve outstanding budget issues before the International Monetary Fund gives the green light on the next payout of bailout cash, the IMF said Saturday as it further cut its economic outlook for the conflict-beleaguered nation, The Wall Street Journal reported. IMF mission chief Nikolay Gueorguiev said Kiev’s pro-West government had reached agreement with the IMF on most of the budget and policy overhauls needed to complete the latest review of the emergency loan program.