Ministry of Finance of Ukraine Newsletter Issue 3, 11 June
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The current economic situation in Ukraine remains very serious. In the first quarter of this year, our GDP fell by 17.6% year on year and we forecast a 7.5% GDP decline and 30% inflation for 2015. However, slowly but surely we are emerging from this crisis. We are making strong progress on our way to recovery focusing on stabilizing the macroeconomic situation, improving the sustainability of our public debt, kick-starting investment and fundamentally changing the business environment in the country. 

Thanks to the agreement with the IMF on a 17.5 billion USD financial support package, we have managed to stabilize our macroeconomic situation and avoided a fully-fledged financial meltdown. We have also taken concrete actions to improve the sustainability of our debt, having brokered two critical agreements with the United States and the European Union in recent weeks. The Loan Guarantee Agreement with the United States allowed us to issue bonds worth $1 billion USD on international markets, fully guaranteed by the United States. The Third Macro-Financial Assistance (MFA) package from the EU provides an additional 1.8 billion euro in funding. 

We have continued our calls for a constructive approach to bring our creditors to the table in our ongoing debt operation. The negotiations are difficult but the debt restructuring is essential to ensure the medium term sustainability of Ukraine’s debt. I am very grateful to the many voices of support from the international community which recognize the need for a swift and realistic resolution to Ukraine’s debt situation. I expect this to be one of the key issues I discuss this week with US policymakers in Washington DC alongside Prime Minister Yatsenyuk.

Last but not least, we are working ceaselessly beyond the country’s financial stabilisation to create the right conditions needed for Ukraine’s long-term growth and prosperity. Fully committed to our ambitious reform program, we are introducing fundamental legal, administrative and financial changes, to put an end to the endemic corruption of the past and create a business-friendly environment in which Ukraine can flourish. 

- Natalie Jaresko, Minister of Finance of Ukraine

Recent Developments   

Negotiations with the Ad Hoc Creditors Committee Continue

29 May 2015 

Representatives of Ukraine will discuss the restructuring of Ukraine’s sovereign debt with the Ad Hoc Creditors Committee in London this week. The Creditors Committee, comprised of four firms, own roughly $8.9 billion USD of Ukraine’s debt. Progress will be assessed with a follow up call with the principles on Friday 5 June. Read more.

G7 Finance Ministers Underline Support for Ukraine and Debt Restructuring

29 May 2015  

Speaking at the meeting of G7 Finance Ministers and Central Bank Governors in Dresden, German Finance Minister Wolfgang Schaeuble noted the G7 Finance Ministers’ support for a successful resolution of Ukraine’s debt restructuring, stating: “We agreed we must try to support the negotiation of the restructuring of Ukraine’s debt, which must be brought to a successful conclusion.” The statement echoes separate calls from other senior international figures, including the current US Treasury Secretary Jack Lew and former Treasury Secretary Larry Summers.

Ukraine and the EU sign €1.8 billion Loan Agreement at Eastern Partnership Summit in Riga

22 May 2015 

As part of Ukraine’s ongoing economic integration and deepening political co-operation with the EU, representatives of the Ukrainian government attended the EU Eastern Partnership Summit, held in Riga, Latvia, 21-22 May 2015. At the summit, Ukraine and the EU signed a Memorandum of Understanding and a Loan Agreement, related to the third Macro-Financial Assistance (MFA) package from the EU totaling €1.8 billion – the largest amount ever given in one package to a non-EU country. Read more.

Ukraine issues US guaranteed bonds worth $1 billion USD

28 May 2015 

Ukraine reached an agreement for a $1 billion USD loan guarantee with the United States, which provides that Ukrainian bonds will be fully guaranteed by the US. Consequently, Ukrainian bonds are priced by participants on the international debt markets on the basis of US Government rates. The issue of $1 billion USD worth of US guaranteed bonds was formally completed on 28 May. Read more.

Agreement reached with ad hoc committee of Ukreximbank creditors in reprofiling of Eurobonds

26 May 2015 

Negotiations with Ukreximbank and its ad hoc creditors' committee have been successfully concluded. The agreed reprofiling of its three Eurobonds will mature in 2015, 2016, and 2018 respectively. This will result in total savings of up to $1.5 billion USD for the 2015-2018 period to Ukraine's balance of payments. Read more.  

Ministry Highlights   

Minister Jaresko leads Ukrainian delegation at EBRD Annual Meeting
At the EBRD Annual Meeting in Tbilisi, Georgia, Minister Jaresko led Ukrainian delegation through in a wide range of multilateral and bilateral meetings. The Annual Meeting also provided an opportunity to meet with a wide range of leaders and experts at the EBRD including infrastructure, energy, SME finance and energy efficiency. She thanked the representatives of the bank for their continued commitment to helping improve Ukraine’s economic situation and business climate. On the second day of the meeting Minister Jaresko joined Economy Minister Aivaras Abromavičius to address a full-house for the presentation “Ukrainian Phoenix: the Birth of a New Reality”, where they discussed Ukraine’s current situation and economic potential. 
Minister Jaresko addresses the Kyiv Security Forum
On 29 May, Minister Jaresko appeared on the distinguished panel of experts during the 8th Kyiv Security Forum, organized by the Arseniy Yatsenyuk Open Ukraine Foundation. During the far-reaching panel discussion – “While Cannons Sound: Ukrainian Reforms on the March” – Jaresko outlined the steps necessary to help Ukraine return to growth through improvement of the situation with the country’s sovereign debt, reduction of the debt burden, improvement of the investment climate and attraction of investments, as well as fundamental changes in the business environment.
Rada Passes Moratorium Law
On 19 May, the Rada adopted a Moratorium Law which authorizes the Government of Ukraine to suspend payments on certain external sovereign and sovereign guaranteed debt, in the context of the country’s ongoing debt operation. The Ministry of Finance nonetheless remains committed to a good faith collaborative solution with Ukraine’s international commercial creditors, and hopes that appropriate restructuring terms can be agreed rapidly.

Ministry of Finance in the News   

Ukraine Seen Prevailing in Creditor Showdown over Debt Write-Off
1 June 2015 – by Josh Robinson & Daryna Krasnolutska
Reform-minded Ukraine Merits Debt Reduction 
Financial Times
18 May 2015 – by Larry Summers
Advisors for Ukraine, Creditors to Meet in London Next Week
The Wall Street Journal
31 May 2015 – by Christopher Whittall and Chiara Albanese
Ukraine minister says ‘all options on the table’ for debt
Financial Times
15 May 2015 – by Neil Buckley, Roman Olearchyk and Elaine Moore
IMF mission gives upbeat assessment of Ukraine, sees signs of 'economic stability' emerging
31 May 2015 – by Richard Balmforth

Give us strength: Act now to support the Ukrainians who are building stability
Politico Europe
23 April 2015 – by Natalie Jaresko
[Video] Minister Jaresko speaks to The Banker’s Stefanie Linhardt at the EBRD annual meeting in Tbilisi
The Banker
15 May 2015
[Video] Former United States Secretary of the Treasury of the United State Larry Summers discusses Ukraine with the Financial Times’ Martin Sandbu
Financial Times
18 May 2015

"Ukraine not paying debts is 'a tool in the toolbox'" - Ukrainian Finance Minister Natalie Jaresko says that while she hopes not to have to deny her country's creditors, "it's an eventuality that we may face."
CNN 20 May 2015
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