Ukraine external debt nears 110% of GDP as of end-1Q

Ukraine’s end-1Q15 gross external debt was USD 126.0 bln, declining 0.3% qoq (USD 0.3 bln), according to a National Bank of Ukraine (NBU) report on June 22. At the same time, gross external debt increased to 109.8% of GDP compared to 95.1% of GDP at the end of 2014 due to heavy hryvnia devaluation. Throughout the quarter, short-term external debt declined 1.4% to USD 55.5 bln. The main debt contraction was related to trade credits (reduced by USD 1.8 bln), long-term credits (reduced by USD 1.5 bln) and foreign currency deposit withdrawals (reduced by USD 1.0 bln). At the same time, the NBU’s liabilities increased USD 3.6 bln and sovereign external debt grew USD 1.7 bln during the quarter.

Alexander Paraschiy: The IMF wire (USD 4.87 bln) was the main factor that balanced foreign currency outflow on credits and deposits in 1Q15. Throughout the year, IMF funding, as well as support from other lenders, will remain the key source of new loans. By the end of the year, we anticipate USD 5 bln from the Fund, USD 1.0 bln in Eurobonds under U.S. state guarantees (USD 1.0 bln was already placed in May) and EUR 1.2 bln from the EU (EUR 250 mln arrived in April). Also the World Bank promised to provide up to USD 1.8 bln in loans. On the other hand, Ukraine will have to pay nearly USD 0.8 bln to the IMF and USD 4.1 bln in Eurobonds (which are subject to the debt operation) in 2H15. Against this backdrop, we are keeping our initial forecast on gross external debt unchanged at USD 131.4 bln by the end of 2015.