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production facilities, a warehouse, and administrative buildings. The agricultural company also leases 226 land plots. This year, the State Property Fund plans to raise ₴4B for the budget from the privatization of small and large objects.
The government of Ukraine will put about 20 state-owned companies up for privatization, including the Hotel Ukraine, a giant shopping center in Kyiv, and several mining and chemical enterprises. Privatization has two main goals: to raise money for the state budget, which this year lacks $5B for military spending, and to strengthen the economy by attracting investment that will eventually make it more self-sufficient. Realizing that the war could scare off investors, the government set a modest goal of selling at least $100M worth of assets this year.
6.2 Debt
The state debt of Ukraine increased by almost $2.6B in May. In May, the state and state-guaranteed debt of Ukraine increased by ₴104.68bn ($2.59B) the Ministry of Finance reports. In particular, the debt reached almost ₴6.12 trillion, or $150.99B.
Ukraine has not agreed with its creditors on Eurobond restructuring terms.Ukraine and a special committee of creditors, representing the owners of almost 20% of Ukraine’s Eurobonds, negotiated between June 3 and 14 and exchanged restructuring proposals. However, according to an announcement by Ukraine’s Ministry of Finance on the London Stock Exchange, they were not able to reach an agreement. Ukraine's proposal was to exchange Eurobonds for:
● a package of instruments with fixed income (Vanilla Bonds) and state-contingent debt instruments (SCDI), tied to the results of 2027 tax revenues and the achievement of a GDP target
● Vanilla Bonds only
These options involve writing off 25% to 60% of the debt. Instead, Eurobond holders offered their own terms, which do not meet IMF requirements. Ukraine and the creditors' committee will continue discussions. An agreement on the terms of the restructuring is expected by August 1.
Kyiv risks losing the trust of future investors due to its desire to write off 60% of its debt to creditors. Bondholders have not received any payments from Ukraine since 2022. With the beginning of the Russian invasion, they agreed to a two-year moratorium. However, August 1 is the payment deadline for the $20B bond package. Last week, negotiations between the Ukrainian government and international investors broke down. A group of creditors led by Blackrock announced that it was trying to reach an agreement. However, the 60% discount offered by Ukraine significantly exceeds the financial market's expectations.
The G7 nations have agreed to provide an additional $50bn loan to Ukraine by the end of this year to support its military, budget, and reconstruction needs. This decision comes as Ukraine faces the imminent expiration of a debt repayment moratorium in August.
The G7 leaders announced that the interest on this loan will be serviced by future revenue flows from frozen Russian assets held in the EU and other
84 UKRAINE Country Report July 2024 www.intellinews.com