MinFin discussing GDP warrants srategy, sees no mid-term pressure

Ukraine’s Finance Ministry and the Cabinet of
Ministers are discussing a GDP warrants strategy, but have yet to develop a
final version, Finance Minister Oksana Markarova told parliament on Dec. 6.
Given the recent macro forecasts (real GDP growth is estimated by the
government at 3.5% in 2019 and 3.7% in 2020), no large payments on GDP warrants
are expected in the near future, she said.

Recall, Ukraine issued GDP warrants for USD 3.24 bln
in 2015-2016 in exchange of part of state and guaranteed debt. Under the
warrants, Ukraine is obligated to pay a portion of GDP in each year of the
period 2021-2040 if real GDP growth in each year of the period of 2019-2038
exceeds 3.0%.

Alexander Paraschiy: Taking into account the base-case scenario of the government’s macro
forecast, Ukraine will have to pay on GDP warrants less than USD 0.1 bln in
2021, less than USD 0.2 bln in 2022-2023 and above USD 0.3 bln in 2024.
Definitely, such payments won’t be painful for the current government, whose
lifespan won’t be longer than 2024. Therefore, it doesn’t look surprising that
the government is not worrying much about the potential pressure of the
warrants on the state debt-servicing schedule. We are keeping our position that
Ukraine’s GDP warrants have further price growth potential.