Ukraine has offered an updated debt restructuring proposal to creditors, its finance minister says, warning that Kiev would halt debt payments if bondholders did not make use of this last chance to clinch a deal in coming talks.

Ukraine is negotiating with foreign bondholders to restructure $23bn (£14.5bn) of debt, but talks have soured over a disagreement on the necessity of a writedown on the principal of the bonds.

The new offer from Kiev is based on a worsened outlook for the Ukrainian economy and, like the initial proposal, it includes an interest payment and principal cut and maturity extensions, finance minister Natalia Yaresko said in a briefing.

Ukraine will stop servicing its debt “if no real progress is made in talks soon, if creditors do not use this last chance to reach an agreement” in the weeks ahead, she said.

The cost of insuring exposure to Ukrainian debt rose on Friday to a three-week high, according to data provider Markit.

The latest offer includes an instrument allowing creditors to recover more value if the economy performs better than currently projected.

This new detail could help the sides reach a consensus in talks, Yaresko told New York-based investors via a video conference call after the briefing.

“The big uncertainty is GDP, so a growth-linked instrument is very sensible indeed,” said Gabriel Sterne, head of Global Macro Research at Oxford Economics.

“But … you still need to work out what GDP you use. What happens if you ‘lose’ the east of Ukraine. You need to spell out clearly if that makes a difference to your payments.”

The creditor group said they had received the updated proposal and would respond in due course.

The GDP-linked instrument proposed by Ukraine is in tune with one aspect of the creditors’ offer which proposes that coupons – or regular interest payments – be paid only when the economy recovers to a certain level.

With the restructuring deal, Ukraine has to come up with $15bn of savings as part of a broader International Monetary Fund-led $40bn bailout aimed at shoring up the Ukrainian economy, which has been pushed close to bankruptcy by years of economic mismanagement and an eastern separatist conflict.

Yaresko said the new proposal to creditors was based on more pessimistic forecasts for the economy in 2015. The IMF said in May it expected Ukraine’s GDP to fall 9% this year, rather than the previously expected 5.5%.

IMF chief Christine Lagarde welcomed Ukraine’s effort to reach a deal with creditors and reiterated that the fund would continue to lend to Ukraine even if a deal is not reached and Ukraine suspends debt payments.

The proposal from the finance ministry will be discussed in a three-way meeting between Ukraine, creditors and the IMF next week, Yaresko said.

She said Ukraine would pay the coupon, worth $75m, on a eurobond owned by Russia and due on Monday.

Russia, which holds $3bn of Ukrainian bonds due in December, has so far refused to participate in the restructuring process as it says the bonds are official, rather than private, debt.

Moscow bought the bonds from Kiev before a pro-Russian president was forced from power early last year, opening a rift which widened with the annexation of Crimea and the outbreak of the pro-Russian rebellion in eastern Ukraine.