Ukraine has successfully finalized a deal to restructure $2.6 billion of its growth-linked debt, known as GDP warrants, marking a crucial milestone in the nation’s post-war economic recovery. On December 18, 2025, the Ukrainian government announced that an overwhelming 99% of warrant holders voted in favor of the bonds-and-cash swap, surpassing the 75% approval threshold needed to retire these complex instruments.

Finance Minister Serhiy Marchenko called the restructuring a key move to make Ukraine’s public finances more predictable and to reduce the fiscal risks posed by these “toxic” instruments, which could have cost the country as much as $20 billion in payouts under rapid post-war reconstruction scenarios.

What Are GDP Warrants and Why Were They a Risk?

GDP warrants are growth-linked debt instruments issued in 2015 following Russia’s annexation of Crimea. Unlike traditional bonds, their payouts are tied to a country’s GDP growth. While innovative, these instruments posed a major fiscal risk for Ukraine, as high economic growth after the war could have triggered extremely large payouts, threatening debt sustainability.

By retiring these GDP warrants, Ukraine is now moving closer to predictable and stable public finances, a critical factor for attracting future international investment and aid.

Details of the Restructuring Deal

Under the agreement, warrant holders will receive:

• $3.5 billion in new C bonds maturing in 2032, with stepped-up interest rates rising from 4% to 7.25%.
• Remaining holders will be allocated $35 million in existing B bonds, maturing in 2030 and 2034.
• $604 million in government-held GDP warrants will also be cancelled, completing the full retirement of this debt instrument.

Finance Minister Marchenko emphasized that the restructuring will save Ukraine billions of dollars in potential payouts, a move that strengthens the country’s financial outlook and lays the groundwork for long-term debt sustainability.

Implications for Ukraine’s Economy and Credit Ratings

The restructuring is a pivotal step in Ukraine’s efforts to re-enter international financial markets. Once finalized, credit rating agencies are expected to lift Ukraine out of default, which it entered after Russia’s 2022 invasion made the country unable to service its debt.

Ukraine’s path to financial stability, however, remains challenging. Multilateral lenders and Western governments currently provide over 80% of Ukraine’s borrowings, highlighting the nation’s dependence on international support. Additionally, the International Monetary Fund (IMF) estimates that Ukraine will require roughly €135 billion ($159 billion) for 2026 and 2027 to maintain public services and fund defense expenditures.

A Step Toward Post-War Recovery

The successful GDP warrants restructuring comes as the European Union considers lending billions of euros to Ukraine using frozen Russian assets, further supporting the country’s defense and reconstruction needs. Marchenko called the agreement “a crucial step toward ensuring long-term debt sustainability and swifter re-entry to international markets once the security situation improves.”

By retiring these high-risk debt instruments and replacing them with predictable bonds, Ukraine can better manage its finances during nearly four years of conflict, supporting both economic recovery and national reconstruction efforts.