The government is running against time as a deal to freeze payments on a series of international bonds - agreed after Moscow invaded the country in February 2022 - was due to expire on 1 August.
Kyiv has struck a preliminary deal with international creditors to restructure government debt worth more than $20 billion, giving the war-torn country some financial leeway, AFP reported.
Ukraine's economy has been devastated by the Russian invasion, and the government relies on international aid to finance both the military and its day-to-day government spending.
The government is running against time as a deal to freeze payments on a series of international bonds - agreed after Moscow invaded the country in February 2022 - was due to expire on 1 August.
In a filing with the London Stock Exchange, the Ukrainian government said it had "reached an agreement in principle" on debt restructuring.
The deal calls for the lenders - a group that includes BlackRock, Pimco and other major institutional investors - to write off billions of the face value of the assets they own and agree to a new payment schedule on terms more favourable to Kyiv.
"We are on track to restore debt sustainability," Prime Minister Denis Schmigal said in a post on X.
"This allows us to free up resources for our defence, social spending and recovery," he added.
The International Monetary Fund, which is a key partner of Ukraine, hailed the move as "an important step in the authorities' strategy to try to restore debt sustainability."
The organization said the Ukrainian authorities' restructuring strategy and measures were "essential to return Ukraine's debt burden to acceptable levels, which will enable an increase in key spending and support growth."
Ukraine claims this will save the country $11.4 billion in debt service over the next three years.
The group of bondholders negotiating the restructuring said it was "pleased to reach a swift and constructive agreement".
"As long-term investors in Ukraine, we are pleased to be able to provide significant debt relief to Ukraine," she said.
The group rejected a proposal presented by Ukraine last month that called for even greater devaluations. | BGNES
