To: 07/20/2022 18:47

Partly because of its high military spending, Ukraine is massively in debt. Together with other creditors, Germany now wants to grant the country a repayment deferral.

Given Russia’s war of aggression, Germany and other creditors want to give Ukraine time to pay off its debts. As announced by the Federal Ministry of Finance in Berlin, Germany supports a moratorium on Ukraine’s debt.

Bilateral debt payment obligations are to be suspended in the period from August 1, 2022 to December 31, 2023. The envisaged internationally coordinated debt service suspension aims to give Ukraine additional liquidity flexibility and thus to support the country financially.

Major creditors comply with Ukraine’s request

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

According to reports, Ukraine had previously requested a suspension of debt service and an extension of payment terms. The country had expressed the wish to be able to suspend the repayment of Eurobonds and the interest due on them for 24 months from August 1. Payments for some gross domestic product mandates are also to be postponed – from May 2023 to August 2024.

“In these exceptional circumstances, and recognizing Ukraine’s exemplary debt service record, members of Ukraine’s Creditors Group support this motion,” the lenders said today. The deferral can also be extended for an additional year.

12.5 billion euros from abroad since the outbreak of the war

The Kyiv government is struggling with the financial consequences of the war with Russia and is heavily in debt. Nearly 4% of the foreign debt is due to liabilities to foreign states. In connection with the war, Ukrainian spending again increased massively, especially in the military sector.

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

Source www.tagesschau.de

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