Ukraine state debt falls 0.6% m/m in August on hryvnia depreciation

Ukraine’s state debt decreased 0.6% to USD 66.6 bln in August from USD 67.0 bln in the prior month, the Finance Ministry reported on Aug. 23. Local debt decreased 2.0%, or USD 449 mln, to USD 22.3 bln. External debt inched up 0.1%, or USD 43.5 mln, to USD 44.2 bln. The trend on internal debt was due to the hryvnia weakening 3.3% to UAH 25.65/USD in August from UAH 24.8/USD in July. In August, the share of external debt slightly increased to 66.4% from 66.0% in the prior month. Remarkably, in UAH terms, state debt increased 2.8% m/m to UAH 1.71 bln from UAH 1.66 bln in the prior month.  

Alexander Paraschiy: The uneventful dynamics on debt demonstrated this year were snapped in September when Ukraine received a long-awaited USD 1.0 bln IMF loan tranche and, subsequently, USD 1.0 bln from a Eurobond placement under U.S. guarantees. What’s more, we anticipate a EUR 0.6 bln loan from the EU coming soon assuming its leaders are happy with the recent energy legislation package the parliament approved, consisting of a new law on the utility sector regulator and a bill – approved in the first reading – on the electricity market. By the year end, we expect state debt will swell to USD 68.5 bln, or 81.1% of GDP.