Arab Today, arab today clock ticking ukraine downplays importance of elusive debt deal
Last Updated : GMT 14:19:06
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Arab Today, arab today

Clock ticking, Ukraine downplays importance of elusive debt deal

Arab Today, arab today

Arab Today, arab today Clock ticking, Ukraine downplays importance of elusive debt deal

Ukraine's Finance Minister Natalie Jaresko
Kiev - AFP

Ukraine's finance minister said Sunday her potential failure to reach an elusive debt restructuring deal with private lenders should not keep the IMF from approving an essential new payment for Kiev when its board meets later this month.

The war-torn and economically ravaged former Soviet country is trying to reach an agreement with some of the world's biggest investors that could save it $15.3 billion (13.8 billion euros) over four years.

But a deal has proven elusive. Kiev is up against seasoned financial world heavyweights such as Franklin Templeton and other creditors who believe that Ukraine has the funds stashed away in its central bank to pay out in full.

The International Monetary Fund had previously signalled that the sides' failure to find a compromise could once again force its executive board to delay dishing out the next slice of Ukraine's urgently-needed loan.

It has further warned that the entire $40-billion Ukrainian rescue -- an amount that includes the debt deal as well as $17.5 billion in IMF assistance and individual government and EU help -- could unravel should the restructuring talks fall apart.

Finance Minister Natalie Jaresko said nothing could be further from the truth.

A debt deal "is very important to the (IMF's) decision but is not an essential condition," she said in an interview published by Kiev's Dzerkalo Tyzhnia weekly on its website.

The US-born economist and investor -- handed her Ukrainian citizenship by President Petro Poroshenko just hours before her appointment as finance minister in December -- said the fund viewed the debt talks as just one component of a major economic overhaul Kiev had been delaying for years.

"The second goal is to see the debt not exceed 71 percent of GDP by 2020. And the third is to see the annual (debt) service payments not exceed 10 percent of GDP starting in 2019," said Jaresko.

"I am certain the IMF will support us if it sees substantial progress and understands have we intend to save these $15.3 billion and reach the other two goals."

She added that Kiev fully expected to receive the fund's hung up $1.7 billion payment in July.

But Jaresko's seeming bravado comes against the backdrop of talks that have failed to produce almost any evident progress for the past three months.

Ukraine's finance ministry said that a committee of Kiev's four main creditors had produced an "unacceptable" list of demands during a rare round of direct phone talks Friday.

"The committee's proposal to offload their sovereign claims into the books of the National Bank of Ukraine is unacceptable as it assumes using (central bank) reserves, in clear violation of Ukrainian law," Jaresko's ministry said in a statement.

- 'We have no money' -

Jaresko will lay out her case to IMF leaders when she accompanies Ukrainian Prime Minister Arseniy Yatsenyuk on a three-day trip to Washington starting Monday.

The pair's job will be made more difficult by Moscow's fury at Kiev's earlier threat to default on loan payments should its lenders ultimately fail to relent.
Ukraine must by year-end pay back a $3 billion loan that Russia's Vladimir Putin extended Ukraine's then-president Viktor Yanukovych for his decision to reject a landmark EU partnership deal.

That pact was struck in the wake of Yanukovych's February 2014 downfall under the pressure of pro-EU protests. Now Moscow -- while waving its right to demand early repayment -- is refusing to negotiate a terms extension and expecting the money back in full.

Jaresko said an outright default by Kiev was unlikely since most creditors will eventually realise that "we have no money".

But she added that regular Ukrainians would hardly feel any worse off should Kiev fail to make its foreign payments on time.

"Obviously, a default would negatively affect Ukraine's ability to access international money markets," said Jaresko.

"But we lack that ability today, without a default, due to the difficult financial situation," she noted.

"We should not be afraid of a default."

 

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