Parliament approved the government's $18 billion debt restructuring plan on Sept. 17 with more than 300 lawmakers approving. The deal saves Ukraine at least $3.6 billion based on a 20 percent write-down on Ukraine's eurobonds. It also postpones debt repayment to a group foreign bondholders led by U.S. asset manager Franklin Templeton until 2019.
Additional payments will come due if
Ukraine’s real gross domestic product exceeds $125.4 billion from 2019 and its yearly
growth exceeds 3 percent.
Should the vote have failed, it
would’ve imperiled Ukraine’s $40 billion international bailout package led by
the International Monetary Fund.
Urging lawmakers to support the debt
relief plan, Prime Minister Arseniy Yatsenyuk said: “Additionally we save some
$5 billion in interest that we were supposed to pay for servicing the debt.”
He also emphasized that Russia won’t get
“better conditions” for its $3 billion Eurobond, which comes due in December.
Russia had refused to join months of debt restructuring talks that led to the
deal being sealed with bondholders at the end of August.
Russian officials, including Foreign Minister Anton
Siluanov, have stated Moscow expects to get paid as per the original terms in
December. The bond’s coupon rate is 5 percent whereas the nine new bonds that
Ukraine will repay each have a 7.75 percent rate. Otherwise Russia will raise
questions as to how the IMF can continue to lend to Ukraine, when it will then
be in official arrears to Russia, hence going against IMF policy of not lending
into official arrears.
All of the four remaining government coalition
parties voted for the deal: Yatsenyuk’s People’s Front, President Petro
Poroshenko’s Bloc, Batkivshchyna and the Selfreliance Party. The Will of People grouping, made up of
mostly former lawmakers from Party of Regions, also voted in favor.
Ex-Prime Minister
Yulia Tymoshenko’s Batkivshchyna Party criticized the GDP trigger clause of the
deal fearing that Ukraine’s economy could recover quicker than expected.
A separate measure supported by 340
lawmakers raised minimal wages and pensions to Hr 1,378 and Hr 1,330 ($ 60.50),
respectively, 13 percent up from their current figures. They go into effect
retrospectively as of Sept. 1.
An additional Hr 10 billion ($5 million) is
needed to shift the increase from Dec. 1 as was planned before.
Finance Minister Natalie Jaresko said the
social benefits changes were also made possible due to the $650 million in
additional revenues the government received in the first eight months of this
year.
Parliament also approved the resignation
of deputy prime minister Valerii Voschevskyi of the Radical party. He had
resigned on Sept.1 after his party left the coalition after constitutional
changes were voted for the previous day that would give regional and local
governments more functions.
That day on Aug. 31 three National
Guardsmen died from a grenade blast outside parliament during a rally opposing
the constitutional changes.
Parliament, however,rejected the
resignation of Health Minister Alexander Kvitashvili.
Kyiv Post staff writer Olena Gordiienko can be reached at
[email protected].
