Ukraine to roll over payments due in 2017-2019, minister says

Ukraine will have to repay USD 14 bln in external debt in 2017-2019, of which about USD 11 bln will be repaid from the state budget, Finance Minister Oleksandr Danylyuk told an economic forum on June 15, the UNIAN news agency reported. To fund the repayments, the government plans to raise new debt, he said.

“Raising funds at international markets under favorable conditions is the key to successful (debt) repayments,” Danylyuk said. “We plan the placement already this fall. Apparently, one can get favorable terms of placement only if progress in reforms is observed”. He said he expects to raise USD 0.5 bln this fall after the completion of the next review of Ukraine’s USD 17.5 bln Extended Funds Facility program with the IMF.

Alexander Paraschiy: It’s quite an ambitious plan to raise USD 11-14 bln on the external markets in the next two years for a country that has about USD 18 bln in gross international reserves and whose reforms are stalling significantly.

At the same time, we are sure the government will make it a top priroity to repay all its debt due in 2017-2019, even if it will have to burn through the nation’s international reserves. We are confident of this because the government will want to avoid any debt restructuring talks or default events in the election campaign season, which will begin in 2H18 (for parliamentary and presidential elections scheduled for 2019).

Therefore, our chief concern is for 2020, when Ukraine is due to repay about USD 5 bln in external debt, after fairly big repayments in 2019. We see the risk of a new debt restructuring in 2020 as very high, and only fast-paced reforms and a foreign investment miracle can lessen this risk. So far, the government has demonstrated no ability or desire to bring this about.