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6.1.3​ Budget dynamics - funding
The Finance Ministry announced placement of €1.25bn in 10-year euro-denominated Eurobonds at a rate of 4.375% per annum ​on January 22. The issuance was almost six times oversubscribed. The joint lead managers were BNP Paribas, JP Morgan and Raiffeisen Bank International. For comparison, last June, Ukraine placed €1bn worth of seven-year Eurobonds with a yield of 6.75% per annum. Markarova posted on the Ministry website: “We are pleased to announce that today Ukraine conducted a price-list of euro-denominated Eurobonds with a maturity of 10 years at the lowest coupon in the history of the country, at a rate of 4.375%, having collected applications from more than 350 investors from all over the world.”
The IMF has given preliminary agreement to a $5.5bn, three-year loan program with Ukraine​, a boost for President Zelenskiy as he meets Russian President Putin today in Paris for peace and gas talks. The surprise announcement for Ukraine’s third IMF package since Russia’s 2014 annexation of Crimea, followed a telephone call on Saturday between Zelenskiy and the IMF’s new Managing Director, Kristalina Georgieva.
Ukrainian Prime Minister Oleksiy Honcharuk believes that the country will be able to obtain €500mn from a new EU macro-financial assistance package​, which is linked to a new programme agreed with the International Monetary Fund (IMF) in December, in the first quarter of 2020. "This tranche can be received in the first quarter of this year, in the near future, in the coming weeks or months," news agency Interfax quoted Honcharuk as saying at a joint briefing with Executive Vice President of the European Commission Valdis Dombrovskis on January 28 in Brussels. The PM said that the European Union confirmed that Ukraine has met all the conditions for receiving the tranche of macro-financial assistance in the amount of €500mn. Ukraine has received €3.3bn in loans from the EU under four MFA programs since 2014.
Ukraine’s Finance Ministry and the Cabinet of Ministers are discussing a GDP warrants strategy​, but have yet to develop a final version, Finance Minister Oksana Markarova told parliament on Dec. 6. Given the recent macro forecasts (real GDP growth is estimated by the government at 3.5% in 2019 and 3.7% in 2020), no large payments on GDP warrants are expected in the near future, she said. Recall, Ukraine issued GDP warrants for $3.24bn in 2015-2016 in exchange of part of state and guaranteed debt. Under the warrants, Ukraine is obligated to pay a portion of GDP in each year of the period 2021-2040 if real GDP growth in each year of the period of 2019-2038 exceeds 3.0%.
EBRD invested €1.1bn in 51 Ukraine projects last year. ​Of the 38 countries where the development of bank loans money, Ukraine was second only to Egypt for the volume of investments and first for the number of projects. In Ukraine, 62% of the loans, or €680mn, were for ‘green’ projects, Anton Usov, the regional spokesman for the European Bank for Reconstruction and Development, writes on Facebook. Investments went to a variety of sectors: solar, wind, electricity transmission, pharmaceutical, agricultural, road, and rail.
Lack of a “well-functioning public administration” holds up disbursement in €4bn in approved European Investment Bank loans to Ukraine, Jean-Christophe Laloux, the bank’s head of lending, told the Ukraine House
31​ UKRAINE Country Report​ February 2020 ​ ​www.intellinews.com