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Ukraine Reaches Debt-Restructuring Deal

Ukrainian Finance Minister Natalie Jaresko

Ukrainian Finance Minister Natalie Jaresko

Kyiv has reached a debt restructuring deal with a group of international creditors under which part of its debt will be written off.

Prime Minister Arseniy Yatsenyuk said on August 27 that investors who own Ukraine's bonds will write off 20 percent of their holdings, shrinking $18 billion in sovereign debt to $15.5 billion.

The deal will also extend the payment period on the government bonds by four years through 2027.

Finance Minister Natalie Jaresko said Kyiv will use the saved 20 percent to spend on social welfare and national defense.

International Monetary Fund Managing Director Christine Lagarde said the agreement will "help restore debt sustainability and -- together with the authorities' policy reform efforts -- will substantively meet the objectives" set by an IMF bailout program.

She also appealed to other bondholders to endorse the deal.

Russia, one of Ukraine's main creditors, which holds $3 billion of Ukrainian debt in a eurobond that falls due in December, said it would not participate in the agreement.

Based on reporting by AFP, AP, and Reuters