Ukraine has declined to pay holders of $2.6 billion in warrants linked to the country's GDP, defaulting on its sovereign debt payment, the Wall Street Journal reported on June 3.

The country's Finance Ministry announced last week it would skip a $665 million government debt payment after failing to agree on restructuring terms with creditors.

Ukraine said in April it had failed to reach an agreement to restructure a debt consisting of so-called GDP warrants, a financial instrument that gives the debtholder the right to additional payments based on economic performance.

"Ukraine remains committed to implementing a comprehensive, fair and equitable restructuring of the GDP-linked securities," the Finance Ministry told Bloomberg last week, saying that the non-payment is linked to a broader restructuring of the country's obligations.

Ukraine's economy has struggled in the face of Russia's war. Its GDP fell drastically in the early days of Russia's full-scale invasion and has steadily grown since.

The European Bank for Development and Reconstruction (EBRD) forecasts Ukraine's GDP will grow 3.3% in 2025, down from an initial forecast expecting growth of 3.5%.

"The GDP warrants were designed for a world that no longer exists. Ukraine's modest economic growth in 2023 was not a sign of surging prosperity but a fragile rebound from a nearly 30% downturn caused by Russia’s full-scale invasion," Finance Minister Serhii Marchenko said in April.

The International Monetary Fund (IMF) has warned that failure to resolve the GDP warrant issue could threaten further debt restructuring, as well as an ongoing $15.6 billion bailout program, the Extended Fund Facility (EFF). Ukraine has said it will seek to abide by its agreements with the IMF.

Kyiv reached an agreement with some of its creditors in July 2024 to restructure more than $20 billion in international bonds, allowing Ukraine to avoid default amid Russia's full-scale war. The Finance Ministry announced last September it had reduced state debt by $9 billion after completing an external debt restructuring process.

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The Kyiv IndependentOleg Sukhov

Ukraine will skip a $665 million government debt payment after failing to agree on restructuring terms with creditors, Bloomberg reported on May 30.

"Ukraine remains committed to implementing a comprehensive, fair and equitable restructuring of the GDP-linked securities," the Finance Ministry told Bloomberg.

On April 24, the Ukrainian government said it failed to reach an agreement with its debtholders to restructure approximately $2.6 billion of debt. This indicated Kyiv could default on its latest payment.

The debt consists of so-called GDP warrants, a financial instrument that gives the debtholder the right to additional payments based on economic performance.

Ukraine has said it will seek to abide by its agreements with the International Monetary Fund (IMF) and official partners, Bloomberg reported.

The IMF has warned that failure to resolve the GDP warrant issue could threaten further debt restructuring, as well as an ongoing $15.6 billion bailout program, the Extended Fund Facility (EFF).

Kyiv reached an agreement with some of its creditors in July 2024 to restructure more than $20 billion in international bonds, allowing Ukraine to avoid default amid Russia's full-scale war.

In September, the Finance Ministry announced it had reduced state debt by $9 billion after completing an external debt restructuring process.

Ukraine's economy has struggled in the face of Russia's war. Its GDP fell drastically in the early days of Russia's full-scale invasion and has steadily grown since.

The European Bank for Development and Reconstruction (EBRD) forecasts Ukraine's GDP will grow 3.3% in 2025, down from an initial forecast expecting growth of 3.5%.

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The Kyiv IndependentThe Kyiv Independent news desk

The EU’s move to reinstate tariff quotas on Ukrainian agricultural exports from 6 June 2025 has drawn sharp criticism from Ukraine’s Agriculture Minister Vitalii Koval, who warned the decision could cost the country between €2.8 billion and €3.5 billion in 2025 alone and undermine efforts to plug the country into the bloc’s single market, Euroactiv reports.

The reintroduction of pre-2022 trade restrictions comes after EU member states, particularly those with large farming sectors, pushed for the change. The move cancels the full trade liberalization granted to Ukraine after Russia’s full-scale invasion in 2022.

Minister warns of “moral losses” and economic harm

Speaking at the Agriculture and Fisheries Council (AGRIFISH) in Brussels on Monday, Koval described the EU’s decision not only as an economic setback but a blow to public morale in Ukraine.

“What about the moral losses? This is not calculated in billions, but millions of Ukrainian citizens supporting integration into the EU,” he said.

Koval noted that agriculture has become Ukraine’s key economic pillar following the devastation of its other major sectors, including chemicals and steel. With farming now contributing 17% of Ukraine’s GDP, he emphasized the weight of the EU’s decision on the country’s overall recovery.

Poland welcomes decision

Poland’s Agriculture Minister Czesław Siekierski celebrated the rollback of liberalized trade with Ukraine, calling it a political win ahead of national elections scheduled for Sunday. Speaking on the sidelines of the AGRIFISH meeting, Siekierski said the move would help address the concerns of Polish farmers, who have been protesting over Ukrainian imports in recent years.

Future trade framework in the works

Koval said Ukraine’s goal remains to develop a long-term trade framework with the EU by the end of July. He framed the Monday visit to Brussels as an effort to counter negative narratives about Ukrainian exports, saying his job was to confront “myths” about disruptions caused by Ukraine’s products.