More tough choices beckon for Ukraine after last week’s debt restructuring highlighted the lack of urgency from Kyiv’s military backers to step in and provide the funding needed to cover a monthly $5bn budget shortfall.
Kyiv last week secured preliminary agreements with bondholders and a group of western governments to push back debt repayments for two years from August 1 after calls to allies to meet the shortfall went largely unheeded.
The agreements, which if signed would free up about $6bn, and were coupled with a 25 per cent devaluation of the hryvnia, ease the immediate pressure on Ukraine to honour its obligations to foreign creditors. In the view of some, they also better reflect the financial circumstances in which the war-ravaged country finds itself. “There was bewilderment among some investors as to why Ukraine had not done this already,” one foreign banker said after last week’s announcement.