Ukraine foreign debt falls 2% to USD 115.0 bln in 2Q16

Ukraine’s gross external debt fell 2.0%, or USD 2.4 bln, to USD 115.0 bln as of July 1, the National Bank of Ukraine (NBU) reported on Sept. 16. By the end of June, external debt was reported at 127.9% of GDP compared to 129.7% of GDP at the end of 1Q16. The strongest decline was in NBU liabilities, which fell 13.7% qoq (USD 872 mln) following repayments on swap operations. The second-largest decline occurred in liabilities of deposit corporations, which contracted 5.6% qoq, or USD 622 mln, in line with external repayments on private debts. “Other sector” debt fell 1.1% qoq, or USD 600 mln, owing to sliding short-term trade credit. General government debt decreased modestly by 0.6% qoq, or USD 223 mln.

Short-term liabilities decreased 4.0% qoq, or USD 1.9 bln, to USD 45.7 bln owing to a USD 833 mln repayment on short-term debt from the NBU (swap operations) and a USD 638 mln repayment on short-term trade credits. 

Alexander Paraschiy: Declining gross external debt contrasted with our expectations. We anticipated that the reviving economy would be pushing trade credits higher and we also expected loans from the IMF and other lenders already arriving in 2Q16. We still expect that external debt will start growing in 2H16, which is already evident from the USD 1.0 bln loan tranche issued by the IMF last week and USD 1 bln in Eurobonds under U.S. government guarantees that are expected to be placed soon. We are also positive about a EUR 0.6 bln loan arriving from the EU. Thus by the end of 2016, we expect external debt to increase to at least USD 117 bln, compared to our forecast early this year of USD 127 bln.