Ukraine can no longer pay its debts

kyiv can no longer meet its deadlines. The country at war asked its foreign creditors for deadlines at the end of July, reports Time. “Falling tax revenues, increased war-related spending, economy likely to contract violently this year (-45% according to World Bank forecasts)”… Ukraine, whose budget deficit “is estimated at $5 billion per month”seen Friday, August 5 Standard and Poor’s “downgrade its debt rating”the non-payment being “quasi certain”, according the financial agency.

However, “some Western countries have already announced that they will accept” to grant delays to Ukraine, supposed to reimburse 1 billion dollars (980 million euros) on 1is September, details the Swiss daily. When a country is unable to pay “negotiations then open between the debtor and his creditors who decide on a deferral of payments, a staggering or a reduction of the debt”.

A debt that grows heavier day by day

The country’s external debt amounted to 100 billion dollars (98.3 billion euros) at the end of 2021. Since the beginning of the war, kyiv has also received international support amounting to 38 billion dollars, the majority “in the form of loans rather than grants”, details the Geneva newspaper. The country has also issued “war bonds”, bonds intended to finance the war effort, to what “in addition to the bond issues of agencies and public and private companies” for 13 billion dollars.

Ukraine has for it to have “the sympathy of a large part of its creditors”. France, the United States, Germany, Japan and the United Kingdom have agreed on a “payment freeze for two years”. Et “several asset managers, such as BlackRock or Fidelity, have also expressed their support”.

What will happen after the conflict? If Russia annexes Ukraine or if the country sets up a pro-Russian government, the most likely scenario would be “a defect that continues”, since he is “possible that Moscow does not feel obliged to reimburse” Ukrainian maturities. If Ukraine wins, its public finances risk “to deteriorate even further”. The July 4 and 5 in Lugano, the international conference on the reconstruction of Ukraine had assessed its cost at 750 billion euros.

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