Ukraine and creditors aim to reach deal

July 1, 2015 02:27 AM

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Ukraine's Finance Ministry and its creditors said on Wednesday restructuring talks in Washington had been productive, leading to an agreement to continue negotiations under confidential terms, in an effort to reach a deal as soon as possible.

Ukraine is seeking to plug a $15.3 billion funding gap, but negotiations with a creditor group led by Franklin Templeton have dragged on for three months as the two sides have been at odds over the need to write down the face value of sovereign bonds.

Three-way talks with the International Monetary Fund were held in Washington on Tuesday and progress was made towards agreeing a deal, Kiev and the creditor group said in a joint statement published on the Ukrainian Finance Ministry website.

"The meeting provided a forum for a useful exchange of views on the Ukrainian macroeconomic setting and technical aspects of Ukraine's envisaged debt operation," they said in a joint statement published on the Ukrainian Finance Ministry website.

Further talks will be held next week between Finance Minister Natalia Yaresko and the creditor group regarding a "possible solution", the statement said.

"The parties have agreed to enter such negotiations in good faith, with no preconditions and with the objective of concluding an agreement on the terms of the debt operation as soon as possible."

Earlier, the chief executive of BTG Pactual Global Asset Management, one of Ukraine's major creditors, told Reuters he was "pretty confident" Ukraine would reach a deal that did not involve a writedown in the principal of the bonds.

Agreeing on a debt restructuring is one of the conditions Kiev must meet under an IMF-led $40 billion bailout program.

Creditors say Ukraine can meet the debt-reduction targets required by the IMF without a writedown in the principal of the bonds, but the Finance Ministry previously rejected a proposal from the bondholders group as it involved using central bank reserves to repay debt in later stages.

 

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Alessandra Prentice,Reuters