Kiev is struggling to restructure its $70 billion debt, including $3 billion bonds sold to Russia.
Some estimates put the debt at around $70 billion. Ukraine has asked its creditors to write off 40 percent of its $40 billion foreign debt and adopt new bonds tied to its future economic performance, arguing this could allow bondholders to make a profit in the case of positive economic in Ukraine.
The government has in the past few months held a series of debt restructuring talks with its creditors and has even threatened to halt bond payments if there is no progress on its $19 billion restructuring.
Ukrainian officials say that skipping the payment would be a “technical default” and just a minor bump in the road for its already hard-hit economy.
But the creditor committee, made up of four members who hold about $9 billion of Ukrainian debt, has suggested that any failure to repay counts as a default and stands to jeopardize Ukraine’s recovery plans.
“A technical default is not the end of the country in any way —it’s the start of restructuring,” Ukraine Economy Minister Aivaras Abromavicius said in an interview to The Wall Street Journal on the sidelines of the Ukraine business conference in Washington.
“It cuts us out of the public markets for a certain period of time, but we knew that from the beginning.”
Bleyzer Foundation director Oleg Ustenko also believes that Ukraine will miss the July 24 payment and will declare a technical default, but is less optimistic about the impact it would have on Ukraine’s struggling economy.
"I think everyone will feel the pinch… Ukraine will no longer be able to borrow abroad which, in turn, will deprive the economy of much-needed boost,” Ustenko told RIA Novosti.