Public debt at 41% of GDP in 2010

Ukraine’s total public debt (direct and guaranteed) grew by 36% over 2010 and reached UAH 432.2 bln (USD 54.3 bln) by year-end, according to the data released by the Finance Ministry yesterday. This equals to 41.1% of GDP 2010E, which is in line with local peers average and corresponds to our expectations. By end-2011 we expect public debt to reach 43%-44% of GDP on the back of 4%-4.5% of GDP fiscal gap (partially financed through privatization), IMF support to the Central bank (USD 6 bln are scheduled to be disbursed in 2011) and some UAH 30 bln (USD 3.8 bln) of fresh state guarantees (according to the budget 2011 law) and banks recapitalization expenses.