Ukraine public debt rises 0.85% in February

Public debt rose 0.85% m-o-m (UAH 4.5 bln) in February to reach UAH 531.9 bln, according to MinFin data released on March 26.  Internal debt was the main source of the increase, adding UAH 9.5 bln (4.4% m-o-m) to the debt stock.  At the same time, external debt declined 1.6% m-o-m (UAH 5.0 bln). By the end of February, external debt accounted for 57.3% of the public debt.

Alexander Paraschiy: A domestic state bonds placement (UAH 5.55 bln) and a bonds injection into the market by state-owned Naftohaz of Ukraine (UAH 3.5 bln) were the key reasons for state debt growth in February. Remarkably, 96% of the month’s new internal placements were denominated in US dollars (USD 668 mln). Internal guaranteed debt increased on the back of new borrowing by the state road maintenance agency, Ukravtodor (+UAH 3.2 bln).

External debt declined on the back of IMF redemptions. It was interesting that the MinFin reported a USD 1.5 bln payment to the IMF (USD 696 mln from the state budget and USD 815 mln from the NBU), while the effective redemption in February was USD 934 mln. Probably, this inconsistency stems from a slightly delayed IMF payment that was due on Jan. 30 but could have been accounted for by the MinFin in February. Against this backdrop, it’s no surprise that USD 1.0 bln in Eurobonds placed on Feb. 4 did not create any external debt increase.

By the end of February, public debt remains near 37.0% of GDP and we expect it to remain in this range till the year’s end.