On April 24, Ukraine announced that it was not able to negotiate an agreement with debt holders regarding the $2.6B connected with GDP warrants. Nevertheless, the Finance Ministry intends to continue discussions. If Kyiv fails to achieve a timely restructuring, it will have to default on a payment of nearly $600M that is due in late May and linked to Ukraine’s economic performance in 2023.
The GDP warrants originated from a previous restructuring of Ukrainian debt in 2015. They have sparked controversy since Russia’s full-scale invasion, as Kyiv and its Western allies wish to prevent their funds from benefiting private investors during Ukraine’s economic recovery.
“The warrants are intended for a world that no longer exists. Modest economic growth in 2023 does not signify increased prosperity but rather a fragile recovery following a nearly 30% decline,” stated the Finance Ministry.
The IMF has previously indicated that without appropriate measures, the warrants represent a significant risk to the stability of its $15.5B aid program. Kyiv must secure an agreement to avoid substantial payments to investors in the years ahead.