Ukraine reduces state debt by $9 billion after restructuring effort
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Ukraine has reduced its state debt by $9 billion after completing its external debt restructuring process, the Finance Ministry announced on Sept. 4.
Kyiv reached an agreement with some of its creditors in late July to restructure more than $20 billion in international bonds, allowing the country to avoid default and continue financing its defense against Russia's full-scale war.
The restructuring process involved the exchange of thirteen series of government Eurobonds and one series of state-guaranteed Eurobonds for Ukravtodor (Ukraine's state-owned road agency), worth about $20.5 billion, for eight new sereis of Eurobonds with a value of $15.2 billion.
The exchange reduced Ukraine's external debt by about $9 billion, the ministry said.
According to the ministry, the savings represent "one of the largest debt write-offs in recent sovereign debt restructurings."
The restructuring effort produced a nominal reduction of 37% from the first day of the agreement and a reduction of the net present value of the debt by around 60%, at a discount rate of 14%, the ministry said.
Ukraine's debt payments are now decreased by 93%, which will save over $11 billion over the next three years. Debt servicing and repayment costs will also drop by 77% between now and 2033, saving nearly $23 billion.
"I am grateful to our investors and official sector partners for their continued support throughout the debt restructuring process," said Yurii Butsa, government commissioner for public debt management.
"The successful outcome is a testament to the constructive cooperation and shared commitment to the long-term macro-financial stability of Ukraine. ... Thus, critical resources will be directed to where they are needed most, namely security and defense."
Ukraine struck a deal with its creditors at the onset of Russia's full-scale invasion to postpone debt payments amid the war's pressure on the country's economy.
Bondholders approved the Finance Ministry's restructuring terms in August 2024.
