Page 8 - UKRRptFeb21

But the really big issue in 2021 is that Ukraine has $16bn of debt redemptions due, of which $11bn fall in the third quarter, which it currently cannot afford to pay without significantly running down its currency reserves. While the government can muddle through the first half of the year it will have to strike a new deal with the IMF in the summer to tap the remaining $3.9bn left in its Stand-by Agreement (SBA) or face a crisis. Ukraine’s form is it usually pulls a deal out of its hat at the last minute when it has to.
Real Economy outlook: ​The real economy was making good progress in 2019 and started to recover in the second half of 2020, but industry and agriculture are still struggling and won't have an easier year in 2021 either.
Banking sector outlook: ​Banks remain one of the bright spots in the Ukrainian economy. Following the clean-up of the last few years they went into the coronacrisis in relative robust health and have weathered the storm well. Banking profitability had already returned to 2019 levels by the autumn of 2020 and while there will be no boom in 2021 they should continue to grow, albeit at a slower speed.
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2.2​ ​Ukraine raised a $340mn six-month bridge loan from Deutsche Bank in the last week of December
Deutsche Bank AG London extended Ukraine a short-term $340.7mn loan in the last days of 2020, the Ministry of Finance of Ukraine said on January 3, as cited by Interfax Ukraine.
The money is intended as a bridge loan as Ukraine’s government scrambles to raise cash in lieu of the de facto suspended International Monetary Fund (IMF) $5bn Stand By Agreement (SBA).
Ukraine received a first $2.1bn tranche in June last year, but following a scandal after the Constitution Court nixed much of the IMF-mandated anti-corruption legislation the programme has been put on hold. A second tranche worth $700mn due in the autumn was not released.
The​ ​government approved a crisis budget​ at the end of last year, but while it can cope with debt redemptions due in the first half of this year it can not cope with the spike in redemptions that include $11bn of repayments that come due in the third quarter and will have to cut a new deal with the IMF before then.
In the meantime the government is raising what money it can. Ministry of Finance has increased the yields on its Ukraine’s Ministry of Finance hryvnia-denominated OVDP treasury bills (OVDP) to 10%-12% and took in a record $2.8bn in December’s auctions, although the volumes of bonds sold was down in the first auction of this year to $300mn.
According to resolution of the Cabinet of Ministers No. 1291 of December 23, Deutsche Bank is a bridge loan for up to six months at a rate of LIBOR plus 5.75% up to three months, which can be repaid ahead of schedule in case of a
8​ UKRAINE Country Report​ February 2021 ​ ​www.intellinews.com