NATO member countries are pouring more loans into Ukraine, along with weapons and grants, while it is defaulting on existing loans. Ukraine’s default is official on $20 billion worth so far, but now a new Ukrainian law allows a general suspension of debt-service payments. Reuters reported that the unicameral Verkhovna Rada had passed, and martial law administrator Zelenskyy signed, an act postponing any debt-service payments on Ukraine’s debt until at least October. The expectation is that restructuring negotiations overseen by the IMF will by then establish a debt moratorium and thus a sovereign default, which has actually already occurred. Wording from the act is given: “It is necessary to introduce, for the period of transactions to change the terms of borrowing [i.e., restructuring], temporary measures related to the servicing and repayment of debt obligations and a moratorium on satisfaction of creditors’ claims.”
This means, of course, that the $50 billion in loans/bonds issued for Ukraine by the United States and Europe based on interest flows from seized Russian assets, will be obligations of the U.S. and European taxpayers which guarantee them.
Against an economy measured by annual GDP at $180 billion and falling, Ukraine has borrowed, according to a Politico account, $58 billion in 2022, $46 billion in 2023, and will borrow at least $52 billion in 2024, including some of the $50 billion promised by hypothecating the interest on the Russian assets. It has apparently made no payments on this debt since the start of Russia’s special military operation in February 2022. Thus payments on this huge and growing debt load have become impossible.
