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Global Economy

Suspension of payments for Ukraine

In view of the Russian war of aggression, Germany and other creditors want to give Ukraine a delay in repaying its debts. As the Federal Ministry of Finance announced in Berlin, Germany supports a debt moratorium for Ukraine.

The payment obligations for the bilateral debts are to be suspended in the period from August 1, 2022 to December 31, 2023. The envisaged internationally coordinated debt service suspension is intended to give Ukraine additional liquidity leeway and thereby support the country financially.

Major creditors comply with Ukraine's request

According to the ministry, the so-called bilateral group of creditors consists of Germany, France, Great Britain, Japan, Canada and the USA. They also urged other creditors to accommodate Ukraine as well. We will continue to work closely with the International Monetary Fund and the World Bank.

According to the information, Ukraine had previously asked for a suspension of debt service and an extension of the payment deadlines. The country had expressed its wish to be able to suspend the repayment of Eurobonds and the interest due on them for 24 months from August 1st. Payments for certain warrants linked to gross domestic product are also to be postponed – from May 2023 to August 2024.

"In these exceptional circumstances, and recognizing Ukraine's exemplary track record in servicing debt, the members of the group of creditors of Ukraine support this motion," the lenders said today. The deferral can also be extended by a further year.

12.5 billion euros from abroad since the outbreak of war

The government in Kyiv is struggling with the financial consequences of the war with Russia and is heavily indebted. Just under four percent of foreign debt is accounted for by liabilities to foreign states. In connection with the war, Ukrainian spending has again increased massively, especially in the military sector.

Kyiv already estimates the monthly need for support from abroad at the equivalent of almost 8.8 billion euros. According to the Ukrainian Ministry of Finance, the equivalent of around 12.5 billion euros in aid and loans from abroad have been used to finance the budget since the outbreak of war on February 24.

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