Page 39 - UKRRptNov20

6.2 ​Debt
Public and publicly guaranteed debt is now at 63% of GDP​. Starting next year, it will decline by 2-3 percentage points annually, according to the NBU.
Ukraine’s state and state-guaranteed debt declined 2.7% m/m to $82.9bn as of September 30​, the Finance Ministry reported on October 27.
State foreign debt dropped 3.6% m/m to $42.0bn, while state domestic debt slid 1.4% m/m to $31.0bn. State-guaranteed debt fell 3.0% m/m to $9.9bn.
In UAHterms, overall state debt inched up 0.2% m/m in September to UAH2,346bn, or 59.0% of Ukraine’s GDP in 2019.
The decline of the state foreign debt resulted in the redemption of Eurobonds for $1.69bn on September 1. State debt in UAHterms increased as a result of 3.0% hryvnia depreciation in September.
We should see some increase of the state debt in October as the receipts from newly placed local bonds will exceed the redemption of local debt.
7.0​ FX
Through August, remittances of Ukrainian labour migrants were down by 11% y/y, to $7.7bn,​ reports the National Bank of Ukraine. In August, Ukrainians sent home $906mn, down from $1bn a month last year. This year, the transfer channels are: banks – 41%; informal – 35%; and international payment systems – 24%.
Ukraine’s hryvnia is likely to weaken to UAH29 per US dollar by the end of the year​, the lowest level since 2015, because of delays in loans from international partners, a Reuters monthly poll showed on October 8.
Analysts polled by Reuters believe that foreign outflows from local bonds and higher government spending on social security amid an economic decline would add more pressure on the currency, resulting in it losing about 18% of its value in 2020.
The hryvnia, which started the year at UAH23.7 to the dollar, has already slipped to UAH28.3.
The government repaid more than $2bn in external debts in September but did not receive an expected $700mn from the International Monetary Fund under its $5-bn stand-by program, because of the IMF’s concern at the lack of progress in Ukraine’s anti-corruption reforms.
The European Union and the World Bank have also postponed disbursements of €600mn and $350mn respectively.
The loans were aimed at supporting financial stability in the country, whose economy plunged 11.4% in the second quarter, amid a lockdown imposed to curb the spread of the coronavirus.
39​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com