Ukraine is set to announce the terms of its $2bn debt restructuring early next month, paving the way for the resumption of the International Monetary Fund's (IMF's) lending programme, reports the Financial Times.

Under the terms of the deal, to be announced in the first week of February, Ukraine is being advised by investors to swap its sovereign debt which falls due before 2002, for new international bonds repaid over seven years with a coupon of 10%, according to a source close to the negotiations. The new bonds, which would be denominated both in euros and in dollars, would have a grace period of about two years, during which no principal but only interest would be paid.