Ukraine state debt decreases 1.3% m/m in August

Ukraine’s state debt decreased 1.3% m/m (USD 867 mln) in August to USD 68.4 bln, according to Finance Ministry data released on September 26. The main factor was a 2.2% m/m decline in external debt by USD 817 mln. By the end of August, internal debt reached 47.2% of state debt.

Alexander Paraschiy: The August result was in line with our estimates. A USD 920 mln IMF redemption was the main reason external state debt fell. Additionally, despite a heavy underperformance in budget revenue, MinFin abstained from active state bonds purchases, placing in August only UAH 2.4 bln in state bonds (vs. UAH 11.5 bln in July) against the backdrop of UAH 5.2 bln internal redemptions.

In September we expect state debt to increase on the back of a USD 750 mln loan Ukraine obtained from the Russian state bank. At the same time, we are observing MinFin’s sluggishness on the internal market while internal liabilities due in September remain high (UAH 4.6 bln), which means that state debt growth won’t be strong.

We still anticipate state debt to increase by an extra UAH 40 bln till the year end (from UAH 546 bln in August) to 39.5% of GDP.