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Ukraine secured an agreement with Western creditors on Thursday to restructure around $18bn of bonds, the Finance Ministry announced, while President Petro Poroshenko held talks in Brussels on the country’s security and economic challenges.
While battling a pro-Russian insurgency in eastern Ukraine, cash-strapped Kiev is also receiving international support to stave off bankruptcy, in return for carrying out wide-reaching political and economic reforms.
The deal agreed with private creditors will relieve Kiev of debt repayments worth about $3.6m, Finance Minister Natalie Jaresko said.
The consortium, led by the US investment firm Franklin Templeton, agreed to write down about 20% of Ukraine’s debt to its face value and delay redemption dates by four years, while increasing its interest rate from an average of 7.2% to an across-the-board 7.75%, she added.
Kiev now hopes to strike a similar agreement on $3bn’ worth of Russian-held debt.
European Commission President Jean-Claude Juncker welcomed the deal, and said it would allow Ukraine to “continue the reform process”, during a joint press conference with Poroshenko.
Kiev has been criticised for failing to make sufficient progress in rooting out deep-seated corruption or pushing through the necessary changes to bring Ukraine in line with Western standards.
EU President Donald Tusk, who also met with Poroshenko, called on Ukraine to “move more quickly” on judicial reform in particular.
EU-Ukraine free trade deal
The Brussels talks also focused on an EU-Ukraine free trade deal, which officials hope will help Kiev’s embattled economy. But its implementation has been delayed to address Russian fears that low-priced European goods could flood into Russia from Ukraine.
Juncker was steadfast that the agreement should enter into effect on January 1. “All manoeuvres aiming to push back the start date … will be without effect,” he said.
Juncker also gave assurances on highly anticipated plans to lift visa requirements for Ukrainian citizens visiting the EU, and said he expects the commission to give a green light by the end of the year.
The move requires the approval of member states, but border matters have become a sensitive issue as the EU is struggling with an influx of refugees. Juncker insisted, however, that there is “no relation” between the migration debate and visa liberalisation for Ukraine.
Poroshenko’s visit follows talks in Berlin on Monday with German Chancellor Angela Merkel and French President Francois Hollande, to discuss the ceasefire deal for eastern Ukraine signed in Minsk in February.
Violations
Key elements of the deal remain outstanding, while violations have been reported on both sides, raising doubt over whether it can be fully implemented by an end-of-year deadline.
Juncker said both parties must implement the accord in its entirety, adding, “I am addressing myself to Russia in particular, because the Russian side appears not to be accomplishing the tasks it should be.”
On Wednesday, the Organisation for Security and Co-operation in Europe (OSCE) said the warring sides had agreed to implement a ceasefire by Tuesday, the first day of school in Ukraine.
But Poroshenko said there was no reason to wait that long.
“Who knows how many lives we will pay until … September 1,” he said, adding, “My request [is] to stop fire immediately.”
