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Ukraine Secures Preliminary Agreement For $20 Billion Debt Restructuring

by THEFUTURE.TEAM

July 23, 2024

In a significant development, Ukraine has reached a preliminary agreement with creditors to restructure $20 billion of international bonds. Announced on Monday, this move aims to stabilise the war-torn nation’s economy amid ongoing conflict with Russia.

The agreement comes just a week before the expiration of a two-year debt payment suspension arranged in 2022. Ukraine’s Finance Minister Serhiy Marchenko highlighted the importance of this deal for maintaining fiscal stability and funding defence efforts.

The proposal involves a 37% nominal haircut on Ukraine’s outstanding international bonds, saving Kyiv $11.4 billion over the next three years, aligning with its IMF programme set to conclude in 2027. This agreement is a historic first, occurring during an active full-scale war.

Economic Impact and Strategic Significance

The restructuring plan is critical as Ukraine’s economy has been severely affected by the prolonged conflict with Russia, which began with the invasion in 2022. The war has decimated the country’s economic infrastructure, leading to heavy reliance on international financial and military assistance.

The deal is designed to preserve Ukraine’s budgetary stability and ensure the availability of cash reserves necessary to sustain its defence and other essential expenditures. The International Monetary Fund (IMF) and the Group of Creditors of Ukraine (GCU) have endorsed the agreement, confirming its compliance with the $122 billion support package framework.

Political and Economic Context

The timing of this agreement is particularly pertinent, given the upcoming U.S. presidential elections in November. A potential shift in U.S. policy, especially under a Trump administration, could affect the continuity of support for Ukraine. This has intensified the urgency for securing a stable financial future through debt restructuring.

Future Prospects

This preliminary agreement marks a pivotal step towards economic recovery and stability for Ukraine. It underscores the resilience of the nation’s financial strategies amid unprecedented challenges. The deal also sets a precedent for debt restructuring during wartime, reflecting Ukraine’s determination to navigate its fiscal crises effectively.

Interest rates on housing loans up and down on deposits

by THEFUTURE.TEAM

October 4, 2024

Cypriot banks raised mortgage rates in August while cutting interest on one-year deposits for households, according to data released by the Central Bank of Cyprus (CBC).

Meanwhile, the total value of new loans dropped sharply in August, falling by 33 per cent compared to July.

The latest figures, published on Wednesday reveal that the interest rate for short-term deposits by households fell to 1.79 per cent, from 1.96 per cent in July. In contrast, the deposit rate for businesses (non-financial companies) travelled in the opposite direction up to 2.33 per cent in August from 2.28 per cent in the previous month.

Consumer loan rates also saw a small decline, dropping to 6.59 per cent from 6.67 per cent in the previous month. Mortgage rates rose marginally to 4.65 per cent, from 4.59 per cent.

Rates for businesses, on loans €1 million also fell to 5.36 per cent from 5.61 per cent. For loans

above €1 million the rate fell to 5.42 per cent from 5.64 per cent.

In terms of new loans, there was a marked drop across the board. Total new loans fell to €395.5 million, down from €596.3 million in July.

Consumer loans also fell with net new loans at €19m, compared to July’s €28m (€26.1m net).

Loans for house purchases also declined significantly, falling to €95.6m, of which €72.3m were net new loans, down from €134.3m (€100.7m net) in July.

New loans of under a million euro to businesses decreased to €52.8m (€34.1m net), down from €75.5m in July (€49.5m net).

Similarly, loans of over a million euros were halved to €179.3m (€78.3m net), compared to €345.2m (€211.8m net) in the previous month.