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Naftogaz creditors reject Ukraine's debt freeze plan
Summary
A look back at the creditor rebuff to Naftogaz's two-year payment freeze, days after Kyiv sought relief on its sovereign debt.
What happened when Ukraine's energy company asked its lenders for time? On 25 July 2022, creditors of the state-owned energy company Naftogaz rejected its plan for a two-year debt freeze.
The rebuff followed a request made days earlier. On 20 July 2022, Ukraine's government, facing an estimated 35% to 45% decrease in GDP, asked its international creditors to freeze its debt payments for two years. That request covered a $1.2 billion payment due at the beginning of September. Major Western governments and other major lenders backed the proposal.
The Naftogaz decision was therefore a setback for the wider effort to secure breathing space for Ukrainian public finances. Creditors of the energy company declined the two-year freeze it had sought.
Sanctions pressure on Russia
The same week brought further economic measures aimed at Russia. On 20 July 2022, the European Union banned imports of gold from Russia and froze the assets of Sberbank.
Together, the developments showed two sides of the economic conflict around the war: Kyiv working to ease its debt burden amid a steep projected economic contraction, and the EU tightening sanctions on Russia.
