Ukrainian parliament passes law on postponing external debt payments
The Ukrainian parliament adopted a bill on July 18 granting the government the right to suspend payments on external public debt until Oct. 1.
The bill was passed immediately in two readings and supported by 231 votes, lawmaker Yaroslav Zhelezniak said. The new law gives the government the right to suspend the payments – if necessary – until an agreement with the holders of Ukraine's external debt is reached.
Proposed by President Volodymyr Zelensky's Servant of the People party, the legislation seeks to postpone payments of international sovereign debt and state-guaranteed obligations past its August deadline.
Ukraine struck a deal with its creditors at the onset of the Russian full-scale invasion to postpone the payments due to the war's pressure on the country's economy. The deal to freeze payments of around $23 billion is about to expire on Aug. 1.
While the first round of negotiations in June ended without an agreement, the second round of talks with the creditors is reportedly ongoing. Finance Minister Serhii Marchenko voiced confidence that a deal could be reached before the deadline.
"The adoption of the draft law is a necessary technical decision that gives the government flexibility before an agreement is reached," the Finance Ministry said.
Although foreign governments agreed to postpone Ukraine's debt payments until 2027, private bondholders have not done so.
Unless a deal is reached, Ukraine must begin payments within a 10-day period of Aug. 1 or officially default.
Liliane Bivings
