Ukraine MinFin projects state debt to fall to 42% of GDP in 2022

Ukraine’s Finance Ministry projects the state debt to
fall to 42.4% of GDP by the end of 2022 from 52.3% of GDP at the end of 2018,
according to the Mid-Term Strategy of State Debt Management for 2019-2022
adopted by the Cabinet of Ministers on June 5.

The strategy anticipates that Ukraine’s GDP will speed
up from 2.8% yoy growth in 2019 to 3.3% yoy in 2020, 3.8% yoy in 2021 and 4.1%
yoy in 2022. MinFin expects the state debt to lower to 51.1% of GDP by the end
of 2019.

The document assumes that the average exchange rate
will amount to UAH 27.4/USD in 2019, UAH 28.2/USD in 2020, UAH 29.4/USD in 2021
and UAH 30.0/USD in 2022. The exchange rate will reach UAH 28.0/USD at the end
of 2019 and will increase to UAH 30.7/USD by the end of 2022.

Evgeniya Akhytrko: The
strategy on state debt management is an important document that demonstrates
significant progress of Ukraine’s government in mid-term planning. The
indicators of state debt-to-GDP for the nearest four years should serve as a
guide for budget and state debt policy development. In addition, the macroeconomic
indicators outlined in the strategy will serve as evaluation criteria for
government performance.

The strategy presents quite an optimistic view on
the development of Ukraine’s economy. The acceleration of economic growth from
2.8% yoy in 2019 to 4.1% yoy in 2022 implies the implementation of effective
reforms that should result in continuing growth of private consumption, and
more importantly, boosted investment. According to the strategy, the annual
depreciation of the national currency will not exceed 5% in 2019-2022, which is
in line with our vision of the exchange rate trend for the mid-term.