Public debt up 5.6% in August

The Finance Ministry said yesterday that total public debt rose 5.6% to USD 35.1 bln in August, according to Interfax. Since the beginning of the year, the public debt load is up 42.7%. Mykyta Mykhaylychenko: The current level of total state debt constitutes some 30% of GDP. The increase in direct public debt is 50% from the issuance of domestic t-bills, which were bought up the central bank (another 50% came from borrowing from the IMF). Although currently such direct financing by the NBU does not create significant inflationary pressure due to weak domestic demand, in the future the government will have to find ways to reduce domestic debt to keep inflation under control and avoid upward pressure on domestic interest rates.