Ukraine state debt increases 2.8% in April

Ukraine’s state debt increased 2.8%, or USD 1.4 bln, to USD 67.1 bln in April from USD 65.2 bln in the prior month owing to hryvnia appreciation, the Finance Ministry reported on May 27. External debt increased mainly due to the issue of USD 430.6 mln in new government debt paper to complete a Eurobond restructuring initiated in 2015. Importantly, hryvnia strengthening in April reduced the value of external debt denominated in UAH. As a result, state debt in UAH fell 1.2% through the month. The share of external debt slightly decreased to 66.4% from 67.5% in the prior month.

Alexander Paraschiy: Ukraine is working towards receiving the next IMF tranche and against this backdrop, the hryvnia exchange rate remains the key factor of public debt dynamics. Given that Ron van Rooden, the IMF mission chief for Ukraine, said the executive board decision will only be made in July at the earliest, we should see the public debt level almost unchanged till August. Still, we remain optimistic about the Cabinet resuming cooperation with the Fund and we anticipate two wires (of about USD 1.7 bln each) in 2H16, which means the state debt will rise to USD 70.8 bln (85.1% of GDP) by the year end.