20:07 12.05.2015

Finance Ministry worried about creditors committee reluctance to engage in negotiations

2 min read
Finance Ministry worried about creditors committee reluctance to engage in negotiations

The Finance Ministry of Ukraine is concerned about the approach taken by the creditors' ad hoc committee representing the country's external debt holders and their reluctance to engage in negotiations, the ministry's website reported.

The ministry said that an alternative to the negotiation cannot be in the interests of the bondholders.

The ministry is determined to negotiate with the debt holders in a process which fully respects the commonly accepted principles of transparency, responsiveness and good faith.

"Immediately after presenting the goals of the debt operation on March 13, the Finance Ministry encouraged the debt holders to form a creditors' committee to start a collaborative process in accordance with IIF (Institute of International Finance) principles. Despite numerous requests from the Ministry's side, the committee refuses to reveal its membership, a highly unusual departure from standard practice in similar situations, and in stark contrast with IIF transparency and disclosure principles," the ministry said in a statement posted on the website.

Commenting on their responsiveness, the ministry said that its head Natalie Jaresko flew to the U.S. and the UK to meet with the largest debt holders immediately after the March 13 presentation. There have been numerous contacts and meetings between the ministry's advisors and the advisors to the ad hoc committee. Last week, Jaresko proposed to speak directly with the one known committee member to accelerate and focus negotiations but was told that it was unavailable to talk to her.

The ministry said that even though Ukraine and the IMF had repeatedly said that the three targets for the debt operation (liquidity, sustainability and payment capacity) have to be met, the committee in its public statements focuses exclusively on the liquidity aspect, and refuses to acknowledge the debt sustainability objective.

The ministry is also concerned that instead of engaging directly in constructive negotiations, the committee chooses to communicate unconstructively through the media.

Ukraine and its creditors need to agree on a sustainable debt level and debt service objectives meeting the targets of the IMF supported program by June, the statement says.

"The ministry remains convinced that a deal can be reached and that it is in the best interests of all parties to do so to ensure the country's financial stability and debt sustainability. The ministry is committed to transparency, responsiveness and good faith negotiations and expects the creditors’ committee to do the same," the statement reads.

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