(Bloomberg) -- Ukraine plans to adopt a law allowing the government to impose a moratorium on foreign debt payments as the country and its international creditors wrangle over terms for restructuring more than $20 billion in bonds.
The draft legislation, submitted by the head of President Volodymyr Zelenskiy’s party, seeks to enable the suspension of payments on international sovereign debt and state-guaranteed obligations because a coupon payment is scheduled for Aug. 1.
The parliamentary budget committee met Thursday morning and recommended that the assembly approve the bill, chairman Danylo Hetmantsev said in a post on social platform Telegram.
Time is running out for Ukraine and its bondholders over the debt overhaul as a freeze on payments that was agreed two years ago after Russia’s full-scale invasion is set to expire. With repayments about to resume in two weeks, the government is asking investors to accept bigger losses that would allow it to finance its defense efforts against Russia and prepare financial resources for reconstruction when the war ends.
After the first round of talks with the creditor group failed to yield an agreement last month, Ukraine said the proposed law is a “technical move” needed to ensure financial stability and debt sustainability.
“It is necessary to introduce, for the period of transactions to change the terms of borrowing, temporary measures related to the servicing and repayment of debt obligations and a moratorium on satisfaction of creditors’ claims,” the bill published on the presidential website said.
--With assistance from Deana Kjuka.
(Updates with quote from the bill, more context starting in fourth paragraph.)
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