Rishi Sunak urged to cancel Ukraine’s national debt

Government exploring options with G7 finance ministers, says cabinet minister

Jon Stone
Policy Correspondent
Wednesday 09 March 2022 17:30 GMT
(UK PARLIAMENT/AFP via Getty Imag)

Rishi Sunak has been urged to cancel debts owed by the Ukrainian state, as part of an aid package to help resist the Russian invasion.

Campaigners, including progressive MPs, said the "crippling" burden should be urgently lifted to support Ukraine's government and put it on a sound financial footing.

Ukraine's debt burden has ballooned since the conflict with Russia started in 2014 – and this month announced it would have to start selling war bonds to fund its armed forces.

The issue of debt cancellation was raised by Green MP Caroline Lucas in parliament this week and the government says it is now being looked at by G7 finance ministers.

“Ukraine’s national debt is crippling. As war drags on and the costs of reconstruction mount ever higher, we cannot leave Ukrainians alone to bear the financial brunt," Ms Lucas said.

"The UK can offer genuine support to Ukrainians by joining with our international allies to cancel Ukraine’s national debt immediately. Aid, not loans, must be provided to Ukraine on a non-commercial basis. We must stand in solidarity with the Ukrainian people.”

Labour MP Clive Lewis said cancelling the debt was "one of the simplest things" the UK could do for Ukraine.

"Through the International Monetary Fund, the UK and Western countries have the power to cancel large amounts of Ukraine’s $94 billion debt," he added.

"Instead Ukraine, one of Europe’s poorest countries, is expected to defend itself against Russian aggression with its hands tied behind its back. Ukraine’s national debt must be cancelled now.”

Mary Kaldor, Professor of Global Governance at the London School of Economics, said Ukraine's "astonishing" resistance to Vladimir Putin's attack "needs all the help it can get".

"Financial support is crucial and that should include debt cancellation so that Ukraine is not burdened with debt servicing and with financial conditionality now and in the future," she said.

And Olga Aivazovska, chair of the Ukrainian civil network OPORA, added: “Putin's goal is to destroy a sovereign Ukraine and its people who are not ready to submit to a dictator, as the Russians did.

"Britain's assistance in defending our country, its financial stability, and recovery, in the long run, will be a worthy strategic investment. The 21st century deserves to be peaceful.”

Ukraine's conflict debts have led to pressure from international bodies like the International Monetary Fund (IMF) to undertake so-called "structural reforms" such as privatisations and deregulations, as a condition of access to finance.

The IMF holds more than a half of that Ukraine debt, totalling a round $13.4 billion (£10.17 billion). Campaigners say that as a member of the IMF’s executive board the UK should push other countries to act.

Asked about the issue in parliament on 8 March, Liz Truss said Mr Sunak "has been discussing this with G7 finance ministers", adding: "We are doing all we can to support Ukraine, in enabling them to have the finances they need, both to resist Russian aggression but also to rebuild their country after this horrendous invasion.

An HM Treasury Spokesperson told The Independent: “Alongside our allies, we’ve hit Russia with the most severe package of sanctions it has ever seen and our economic and humanitarian support now totals around £400m.

"We are continuing to work with our G7 partners and International Financial Institutions and stand ready to do more.”

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