How is it possible to write off debt?

3 steps to cancel Ukraine's foreign debt

1. No payments before the end of the war: From 2025, Ukraine will pay back more to the IMF than it receives in financing from it. Debt service to international financial institutions should not exacerbate the problem. IFIs should be required to provide positive net flows; if no positive net flows are provided, automatic payment suspension should be triggered immediately.
2. Debt relief from major state sponsors, such as the G7 and the EU, should be included in any plans for Ukraine's reconstruction after the war. Additionally, foreign state creditors can assist with debt repayments to international financial institutions, as they hold substantial amounts of unutilized Special Drawing Rights (SDRs) on their balance sheets and could establish a special fund to settle Ukrainian debts.
3. Ukraine's partners, such as the G7 and the EU, should provide complete legal protection for Ukraine against any debt claims by private investors, offering them full restructuring and debt relief in exchange for their participation in Ukraine's reconstruction projects.
   

We have examples in history for such debt treatment:

• The London Debt Accord for post-war Germany in 1953 contained provisions explicitly designed to ensure that the debt burden, as well as future debt servicing, would not hinder but rather promote the country's economic prosperity.
• Another example is Iraq in 2003, after the fall of Saddam Hussein. Here, the UN Security Council immunised oil revenues from access by creditors, ensuring that no one could access them before a comprehensive settlement was reached.

Ukraine's economic reconstruction plans present a political opportunity to promote debt cancellation, making such a move more attractive as a win-win for both state and private donors. With proper support and debt relief, Ukraine can become a country with a strong economy and contribute to economic cooperation with G7 countries and private investors.

The benefits of this outweigh any short-term gains from continued debt pressure on Ukraine.