Ukraine to reduce state debt to 49% of GDP by the end of 2020

Ukraine’s government will pursue a tightened debt
policy for 2018-2020, aiming to reduce state debt to 60% of GDP by the end
2018, 52% of GDP in 2019 and 49% of GDP in 2020, the Interfax-Ukraine news
agency reported on Aug. 22, citing the new government strategy for state debt
management in 2018-2020. “Our new goal is more ambitious,” noted acting
Finance Minister Oksana Markarova. Previously, the government aimed to reduce
debt to 62% of GDP by the end of 2018 and 58% of GDP in 2019.

Ukraine is not likely to face payment on GDP warrants
(VRIs) issued under the 2015 sovereign debt restructuring in the mid-term,
according to MinFin estimates. The strategy assumes annual GDP growth of 3% in
2018-2019 and 3.8% in 2020. The average exchange rate is projected at UAH
29.4/USD in 2019 and UAH 30.2/USD in 2020. The strategy also assumes the
possibility to buy back Ukraine’s Eurobonds through public offers.

Evgeniya Akhtyrko: This update of the government’s debt management strategy with more
ambitious goals is a positive development. It improves government
accountability and restrains excessive public spending. We see risks in
reaching its goals in 2019 as the government could boost state social payments
for the presidential and parliamentary elections.