Ukraine’s public debt falls to USD 65.5 bln in 2015

Ukraine’s public debt reached USD 65.5 bln as of end-2015, according to the Finance Ministry’s  data release on Feb. 2. In 2015, public debt fell by 6.2% in dollar terms, or by USD 4.3 bln. Hryvnia devaluation, which shaved off local debts by USD 8.9 bln (in spite of the fact that local debt in hryvnia grew UAH 40.6 bln throughout the year) and a USD 3.0 bln haircut of sovereign Eurobonds were the key reasons for debt decline. At the same time there was inflow from the IMF (USD 5.3 bln net), new Eurobonds under US guarantees (USD 1.0 bln),  a World Bank loan (USD 1.0 bln) and EU loan (EUR 0.85 bln). The share of external liabilities increased to 66.3% of total public debt as of end-2015, vs. 55.6% at the start of the year.

Alexander Paraschiy:  The year-end public debt  of 81.5% of GDP is close to our estimates.  Delayed IMF funding as well as loans from other donors are the main reasons why it is less than the 94.1% of GDP projected by the IMF.

For 2016 we project public debt increasing due to loans carried over from 2015 and new borrowings from Western partners. Also there will be no debt redemptions in 2016 due to debt restructuring deal that will also contribute to debt accumulation. In particular, we anticipate USD 5.8 bln arriving from the IMF, EUR 1.2 bln from EU, USD 1.0 bln through Eurobonds placement (under U.S. guarantees), and additional aid of about USD 1.5 bln from other Western donors. By the end of the year, we expect the state debt to swell to USD 74.5 bln, or 89.6% of GDP.