Ukraine gross external debt surges to 122.8% of GDP by mid-2015

Ukraine’s 2Q15 gross external debt increased 0.8% (USD 1.0 bln) to USD 127.0 bln, or 122.8% of GDP as of July 1, according to a National Bank of Ukraine report on Sept. 18. Short-term external debt remained almost unchanged, just slightly increasing 0.3% (USD 0.2 bln) to USD 59.1 bln. An increase in state liabilities (by USD 1.3 bln) on the back of new loans from the IMF and other Western partners was offset by outflow from other deposit corporations (USD -1.4 bln), primarily due to foreign currency deposit withdrawals.

Alexander Paraschiy:  External support from the IMF and other Western partners were the key sources of capital inflow in 1H15. On the other hand, deposit withdrawals and shrinking trade credit have been reducing external liabilities.  We expect the trend will sustain itself in 2H15; however, foreign currency deposit withdrawals will ease on the back of a stabilized situation. The debt restructuring will not affect external debt stock much in 2015. The point is that the restructuring’s 20% haircut (USD 3.6 bln) will be offset by a maturity extension of USD 4.1 bln in Eurobonds. Against this backdrop, we still expect gross external debt to increase slightly to USD 131.4 bln by the end of 2015.