Ukraine gross external debt reaches 135% of GDP by October

Ukraine’s gross external debt (private and public) inched up by 0.4% qoq (USD 550 mln) in 3Q15 to USD 127.5 bln as of Oct. 1, the National Bank of Ukraine (NBU) reported on Dec. 18. A new IMF wire of USD 1.7 bln was the main reason for the increase. This amounts to 135% of Ukraine’s GDP, we estimate.

Alexander Paraschiy: Wires from the IMF and other Western sovereign creditors remain the key reason for the higher debt. There won’t be any noticeable capital inflow in 4Q15 considering that the IMF has been waiting for the 2016 budget to be approved. State debt restructuring should decrease debt stock by at least the size of the autumn haircut on state Eurobonds (USD 3.0 bln). Against this backdrop, we anticipate gross external debt to slightly decrease in 4Q15, to USD 125 bln. In 2016, we expect gross external debt to reach USD 135 bln on the back of IMF loans (USD 5.8 bln), a new Eurobond placement (USD 2.0 bln) under U.S. state guarantees and other loans from the EU and IFIs.