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Ukraine reaches debt relief deal with creditors

Ukraine has reached a crucial deal with its international bondholders that will help prop up its government finances and keep the struggling country from defaulting on its debt.

Prime Minister Arseniy Yatsenyuk announced the value of Ukraine's 19 billion US dollar sovereign debt will be cut by 20% to 15.5 billion dollars.

A statement released by the finance ministry said the deal would also extend the payment period on the government bonds by four years to 2027.

Kiev hailed the agreement as a "critical step towards macroeconomic stability, creating a healthy economy and attracting international investment".

Under the deal, Ukraine's repayments on its bonds will depend on how quickly the economy, battered by a separatist war in the east, grows. Ukraine will pay nothing on its bonds if its economy grows less than 3% annually.

The deal is a "win-win, creating a virtuous economic circle for Ukraine and its international commercial creditors who also have a vested interest in seeing Ukraine's economy thrive", the ministry said in the statement.

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