Ministry of Finance statement on domestic debt default of state railways Ukrzaliznytsya

The Ministry of Finance notes that today's announcement of Ukraine’s State railway company's (Ukrzaliznytsya) default on its domestic debt demonstrates the seriousness of the financial situation of the company. Ukrzaliznytsya will restructure all its private sector debt, including the $500 million Eurobond that is included in the general debt process under the IMF-supported program.

The current payment default will not impact the obligations owed by Ukrzaliznytsya to state-owned banks Ukreximbank and Oschadbank. While certain debts owed to Oschadbank will be included in the restructuring process in the future. This will not create material problems for the bank due to the small amount of debt owed by Ukrzaliznytsya.Ukrzaliznytsya’s default on domestic debt is not part of the perimeter of the debt operation agreed under the IMF Program. However, it demonstrates the macroeconomic challenges Ukraine is facing and the need to achieve a successful resolution of the sovereign debt operation as agreed upon by the IMF.

Finalizing the restructuring of debt remains one of Ukraine’s most critical financial goals and was established under the IMF’s Extended Fund Facility (EFF) program to ensure Ukraine achieves a sustainable medium-term debt policy.