Public debt increases 2.3% in January

The state debt increased 2.3% m/m (UAH 11.9 bln) in January to reach UAH 527.5 bln, according to MinFin data released on Feb. 25. The key driver was internal debt, which was up UAH 11.1 bln (+5.4%) for the month. Yet that portion remains smaller than external debt, which accounts for 58.7% of total debt as of end-January.

Alexander Paraschiy: The state debt has already exceeded 37.5% of GDP (our provisional estimate). The number is not critical but the debt is increasing somewhat faster than we expected. Domestic state bonds were the main source of the January debt increase and it’s remarkable that USD-denominated state bonds were responsible for 2/3 of the January internal debt. What’s more, UAH 2.5 bln of the new debt stemmed from refunding the state natural gas monopoly Naftogaz. The Cabinet increased Naftogaz’s statutory fund with UAH 8.0 bln in state bonds, UAH 2.5 bln of which went promptly to market. For 2013, we expect the public debt will grow in line with the state borrowing plan and stay near the level of 37% of GDP.