Rumors spread that the hryvnia exchange rate could immediately jump by 20% already this summer and reach a historic 50 hryvnias. Experts see the reason in the fact that Ukraine must immediately pay $20 billion of debt to creditors. There is no such money, and to take from reserves is to increase panic. Failure to pay is a default and may be grounds for suspension of other lines of credit.
On August 1, the moratorium on the ban on foreign debt service payments ends. In case of failure of agreements with creditors, default awaits Ukraine.
The approximate amount that Ukraine must pay this year, according to the publication, is 15% of GDP, which is the second largest after defense spending.
Currently, the Ukrainian Ministry of Finance is negotiating a reduction of 60% of the current value of debts. But creditors still agree on 22%.
In the absence of an agreement, Ukraine has two options. One is to negotiate an extension of the debt service freeze, as has already been done with official creditors, who will waive payments until 2027. Another is default. This may sound drastic, but there is really no difference between the scenarios. One way or another, Ukrainian payments will not resume.
We will remind that from February 2022 to February 2024, the state debt in currency equivalent increased by $50.4 billion, or a little more than half. Currently, it makes up more than 85% of Ukraine's GDP.
