Ukraine cracks up on its creditors


May 19, 2015

Pavel Shipilin

Translated by Kristina Rus

Today the government of Ukraine submitted to the Verkhovna Rada the bill on the right to impose a moratorium on the payment of foreign debts. “The right to impose a moratorium is necessary for the government to exert pressure on the board of creditors” — said LigaBusinessInform. 

Negotiations on debt restructuring have been ongoing since March and had to end no later than June 31, when the IMF will make a decision on the next tranche on the basis of the progress. “It’s time for the lenders to help Ukraine,” – Arseniy Yatsenyuk tried to cheer up the main committee of holders of Eurobonds of Ukraine, headed by the American investment fund Franklin Tempelton. However, the effort had failed — Franklin Tempelton, which owns about ten billion dollars of debt, refused to show up for negotiations and is obviously up to no good.

Even though the young democracy has prepared, from its point of view, the excellent terms – to forgive a third of debts. Not even a half. But the Western partners did not appreciate a constructive approach. The Finance Ministry even had to publicly express concern over the conduct of the creditors ‘ committee which is not ready to participate in negotiations, much-needed for Ukraine.

The concern didn’t help. Therefore the extreme measures had to be taken and the law on the moratorium on payment of foreign debts was a hint that Ukraine is actually doing them a favor. In other words, it is up to debate who is the creditor and who is the debtor.

According to the head of the analytical department at Concorde Capital, Alexander Parashy, to fulfill the terms of the IMF Ukraine should achieve debt relief totaling $12 billion. In my opinion, a faint endeavor — Western lenders are fundamentally different from the Eastern. Because they are so rich for never forgiving nothing to nobody. Even to those whom they trained to eat from a spoon. 

In fact, this was the whole point.

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