Thoughts on Ukrainian Debt Restructuring

08/29/2015

I was very glad to see Ukraine reach a deal involving reduction in the principal value of its debt with major creditors. This would not have happened without the tenacity and determination of Ukrainian finance minister, Natalie Jaresko, and Ukraine’s political leadership. Congratulations also to the IMF and the U.S. Treasury for their strong efforts.

This is a positive development in a very difficult week and period for the global financial system. I wish that political authorities from Greece to China were showing the commitment to reform that is apparent in Ukraine.

Ukraine still has a long road ahead in the economic realm. There are debt issues with Russia that will need to be resolved. Radical moves to market based systems are necessary if Ukraine’s economy is to function properly. Even before Russia invaded Ukraine’s economic performance was dismal with corruption as a central challenge. Now with the Russian incursion the challenge is even greater.

What the international community does for Ukraine will over time be even more important than what it does to Russia. Governments around the world and the international financial institutions need to step up their support for Ukraine rhetorically, through advice, and most important through the rapid delivery of financial assistance.

August 29, 2015

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