Page 38 - UKRRptOct21

Ukraine’s Finance Ministry paid $1.3bn on its Eurobonds on September 1, the ministry reported the same day. In particular, it repaid $974.1mn Eurobond on its maturity and paid a total $334.6mn of coupons on this and six other Eurobonds (maturing on September, 1 each year till 2027).
MinFin is scheduled to pay $3.6mn on foreign currency debt by the end of 2021, it reported.
September is the toughest month this year in terms of MinFin’s payments on international debt. Besides these payments on Eurobonds, the government will face later in September the maturity of a $1,000mn US-guaranteed bond and $111mn of coupons on Eurobonds maturing in 2032.
On top of that, Ukraine is scheduled to pay almost $500mn to the IMF this month (of which, about half is paid by MinFin).
With this load, in September alone, Ukraine will use foreign currency for payments on international debt in the equivalent of more than it received from the IMF’s SDR distribution program in August ($2.7bn equivalent). The IMF’s money, therefore, came at a good time.
Most of the foreign currency payments of the government in October-December are related to the maturity of local Eurobonds (equivalent of $1.5bn) which the government might have been expecting to roll over (most of such bonds’ holders are local state-controlled banks).
That said, Ukraine’s foreign currency debt schedule for the rest of 2021 looks safe. This, however, does not diminish the need for MinFin to raise new debt, as financing of the 2021 budget deficit remains an issue.
EU Commission approves €600mn MFA tranche for Ukraine.The European Commission decided to disburse a second tranche under the COVID-related Macro Financial Assistance (MFA) for Ukraine in the amount of €600mn, rbc.ua news site reported on September 15, citing the Commission’s vice-president Valdis Dombrovskis. PM Denys Shmyhal and president Volodymyr Zelenskiy confirmed this in tweets. Ukraine has implemented all the political conditions for the tranche and progressed in its IMF program, which allowed the Commission to make a positive decision on the second tranche, Dombrovskis told rbc.ua. He added that the payment is likely to be made in October. The day before, Shmyhal revealed his expectation that the tranche would arrive in November. The COVID-related MFA program for Ukraine was initiated by the EU in June 2020 for a total value of €1.2bn. The first tranche under the program for €0.6bn was disbursed in December. The upcoming disbursement of the second tranche is a positive surprise. With this tranche, Ukraine will secure its financial stability and will lower its need to seek domestic financing of the budget deficit. This, however, does not secure a positive result for the IMF’s review under the Stand-by program. Moreover, easy money from the EU may make the Ukrainian government relax its drive to keep its commitments to Western partners thus raising the probability of political events/movement against reforms in the short-term. As before, we estimate the probability of the IMF’s next tranche as below 50% in 2021.
EBRD assist in upgrading the Kyiv district heating system, thanks to a
38 UKRAINE Country Report October 2021 www.intellinews.com