Ukraine Finance Minister Natalie Jaresko said Friday that restructuring the country's finances is going to require bondholders to write off some of the debt.
"Given the amount of public sector sovereign debt that we have... this means that this restructuring is going to be complicated," Jaresko said in New York.
"It's going to require some combination of both maturity extension, coupon reduction, and principal reduction," she said in a speech at the Council on Foreign Relations.
Ukraine launched into talks with creditors a week ago after the International Monetary Fund confirmed a new $17.5 billion loan as part of a $40 billion financial rescue for the country, and delivered the initial $5 billion from it to Kiev.
Bondholders are expected to contribute $15 billion to the rescue in the form of relief on payments the government has to make on existing debt.
Jaresko said creditors "are naturally acting surprised" at Kiev's stance, but that "so far we've got a reasonably good sense that everyone is supportive and understanding."
Jaresko acknowledged that making the bailout work to stabilize the country's finances and get the economy growing again, in the face of a pro-Moscow insurgency that has occupied a large part of the country's east, is a substantial challenge.
"There are a lot of pieces to the puzzle that are not just predictable, that's the hard part," she said.
She pointed to the potential for another shock "if the very fragile ceasefire doesn't hold" with the rebels.
However, she said, "Any increase in violence, any further disruption to the ceasefire, ought to be married with increasing sanctions."