Ukraine’s lenders have agreed to campaigners’ demands to suspend the country’s debt repayments for around two years. This will free up billions of dollars to enable the Ukrainian people to address the severe humanitarian crisis and costs of the Russian invasion.
The Ukrainian government yesterday requested that government creditors and bondholders agree to a suspension of repayments until the end of 2023, extendable by another year.
The Group of Creditors of Ukraine, including the UK, the US and Germany, responded by agreeing to the request and strongly encouraging bondholders to consent.
Ukraine has now received explicit indications of support from its main private lenders including BlackRock.
Ukraine was due to spend $7.3 billion in debt repayments in 2022 alone.
MPs Caroline Lucas (Green), Chris Law (SNP) and Richard Burgon (Labour) were powerful advocates for debt relief for Ukraine in the UK Parliament.
This breakthrough shows how campaigning can help to convert the unthinkable into the inevitable. Thank you to everyone who has supported this campaign - whether it’s signing our petition, sharing our articles or helping us to spread the word. You have helped to push this issue onto the political agenda.
The Ukrainian government and its Western allies had previously insisted that it would pay its debts, and repayments to bondholders have continued throughout the invasion. Only last week the IMF insisted that it expected Ukraine to continue to pay.
In the long term, the struggle will continue to ensure that, once the war is over, the debt of a free Ukrainian government is cancelled, so that all available resources can be dedicated to what will be a massive reconstruction effort. It seems highly unlikely that Ukraine will restart paying off its creditors after the end of the war – eventual debt cancellation should be inevitable.
These developments will increase the pressure on the G20 to apply a similar level of political will to resolving the debt crises facing other lower income countries such as Zambia and Sri Lanka.