Ukraine finance minister lobbies lawmakers to back debt deal

KIEV (Reuters) - Ukraine's finance minister was lobbying lawmakers on Wednesday to secure parliamentary support for a government debt restructuring deal which international supporters have described as critical for the country's financial stability.

The proposed deal will be discussed by parliament on Thursday. It has been welcomed by the International Monetary Fund, whose $40 billion bailout programme hinged on cash-strapped Ukraine finding $15 billion through a restructuring.

But some opposition politicians have said it does not provide enough debt relief, while Russia has said it will not take part, meaning several hurdles remain for the deal to be implemented.

Finance Minister Natalia Yaresko said she had been meeting lawmakers to persuade them to vote in favour of the agreement.

"I'm working on this, I'm meeting all the factions," she told journalists at a signing ceremony for a $500 million loan from the World Bank. She arrived late to the event, explaining that talks with MPs had dragged on.

"All international creditors, including the IMF and Germany and others ... expect this to be completed successfully so that they can provide us with credit guarantees or loans," she said, adding that a failure by parliament to approve the deal would hold up Ukraine's IMF programme.

Earlier, Prime Minister Arseny Yatseniuk also urged lawmakers to back the deal, saying not backing it amounted to supporting a default.

"Not voting for restructuring based on political, populist and untrue evidence ... means that these members of parliament support the country defaulting and support Russia, which opposes these agreements," he said.

Following months of tense negotiations, the finance ministry and a group of Ukraine's largest creditors, led by Franklin Templeton, struck the deal on Aug. 27, agreeing a write-down of 20 percent of the principal owed.

Ukraine has included a $3 billion Eurobond held entirely by Russia among the sovereign and sovereign-guaranteed bonds to be restructured, but the Kremlin has repeatedly said it will not participate in the process.

The deal requires not only parliamentary approval but also backing from Ukraine's remaining creditors, some of whom have said the terms are unfair to holders of bonds maturing this year.

Former U.S. treasury secretary Lawrence Summers said on Wednesday it would be a mistake for parliament to vote against the "shrewdly designed" agreement.

If this happened, "international financial support would dry up as Ukraine would be seen as unable to carry through on commitments. Confidence in the stability of Ukraine's currency and banking system would be put at risk. And its leverage vis-à-vis its debt to Russia would vanish," Summers wrote in the Washington Post.

(Editing by Hugh Lawson)

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