Ukraine’s public debt breaks 60% of GDP ceiling

UKRAINE - In Brief 29 Sep 2014 by Dmytro Boyarchuk
In August public debt grew 12.9% m/m up to UAH 945.8 billion ($69.5 billion) which is near 63% of GDP (our estimate of GDP). Refunding of Naftogaz (UAH 46.7 billion) as well as new wave of hryvnia weakening were the key reasons for fast state debt growth through the month. Though this result was already predictable (the IMF anticipates 67.6% of GDP in 2014 and Ukrainian authorities also increased debt ceiling to the level above 60% of GDP) crossing this line has important implications in terms of debt relations with Russia. Recall that covenants of $3 billion Eurobonds placed in December 2013 by Yanukovitch authorities presume that Eurobonds’ holders (Kremlin) can call early redemption of the debt if Ukraine’s debt exceeds 60% of GDP. Finance Minister of Russian Federation Anton Siluanov already mentioned that Moscow might use its right on calling early redemption however they will wait till official numbers on GDP released. Also Mr. Siluanov stated that Kremlin has not decided yet on this issue. Though we do not have any official response from Kyiv on such risk, we believe Ukrainian authorities very likely will ignore such call for early redemption should it happen. And we see at least two reasons for such reaction. Firstly, Moscow is pretty much responsible for Ukraine’s debt grows as well as for poor GDP performance. In this respect referring to indicator, which Kremlin stimulated to be so high, has poor legitimacy. Secondly, Russia occupied solid part of Ukrainian territory. In essence the territories Russian forces overtook are responsible for a least UAH 110 billion of Ukrainian debts (taking proportionally to population). In this context we will not be surprised...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.