The Ukrainian government has announced that it will not pay the $665 million debt due due, due to not reaching a restructuring agreement with a group of international creditors led by speculative funds. The statement was made by the Ukrainian Finance Ministry in the context of growing concerns about the country's bankruptcy.
The amount is part of a GDP- linked bond package, worth a total of 2.6 billion USD, of which 665 million USD is due for payment on June 2. According to the Ukrainian Finance Ministry, the country has been extended its debt repayment for 1 year in advance under the decision to postpone bond payments approved by Kiev. The measure of deferment will be maintained until an agreement on debt restructuring is reached.
The Ukrainian government admitted in April that it could not reach a deal with creditors to restructure part of the $3.2 billion debt. During the negotiations, Ukraine has offered investors two options, including a full swap to government bonds through the reissue of current bonds.
However, the creditors only agreed to restructure the May payment, asking Kiev to pay more than $400 million in cash and convert more than $200 million into new bonds - a condition that Ukraine rejected.
Although it has failed to fulfill its debt repayment obligations, Ukraine has not fallen into a state of formal bankruptcy thanks to a provision that has been eliminated in the agreement with international credit institutions in 2024.
Previously, the provision known as "crossing debt done" stipulated that if Ukraine cannot repay GDP bonds, it would be considered a debt default for all other debts, including international bonds.
The removal of this provision means that Ukraine is not required to declare bankruptcy for current international bonds.
Ukraine's financial situation remains very tense as the country continues to face the consequences of a prolonged conflict. The delay in payment and the failure to reach a debt restructuring agreement has caused concerns about Ukraine's financial stability to continue to increase in the international market.
