Ukraine dollar-denominated debt falls 0.8% m/m in June

Ukraine’s USD-denominated state debt fell 0.8% m/m in June, or USD 589 mln, to USD 69.5 bln, according to MinFin data released on Aug. 7. External debt decreased 0.7% (USD 285 mln) while internal debt fell 1.1% (USD 303 mln) through the month. The share of external debt increased to 59.2% from 59.1% in the prior month.

Alexander Paraschiy: Both external redemptions and internal payments pulled the state debt down in June. In particular, Ukraine paid back USD 1.0 bln in Eurobonds and USD 193 mln in IMF liabilities. At the same time, Ukraine received nearly USD 1.0 bln in funding from the EU. Within domestic liabilities, UAH 6.4 bln in state bonds were placed and UAH 8.8 bln was redeemed, thus cutting internal debt by UAH 2.2 bln. As a result, the state debt reached 55% of GDP by mid-year.

In light of the recent refunding of Naftogaz (UAH 63.3 bln), state debt prospects look quite pessimistic. On July 31, parliament approved budget amendments, among them a substantial ceiling increase that allows state debt to exceed 60% of GDP, or UAH 960 bln (including guaranteed debt) by the year end. Still as of now, we anticipate state debt will not exceed 59% of GDP by the year end.