Page 37 - bne IntelliNews Ukraine Country Report May 2017

Ukraine's state debt increased 0.8% in March to $72.4bn from $71.8bn in the prior month, the Finance Ministry reported on April 27. The main reason was a state bond issue (UAH10.1bn) for the replenishment of statutory capital of state banks. As a result, internal debt grew 1.9% (by $0.5bn) to $26.7bn. External debt remains almost flat, rising 0.2% in March to $45.7bn. The share of external debt decreased slightly to 63.2% from 63.6% in the prior month.
Extra support for two state banks in March underpinned debt growth. In particular, the Cabinet approved the replenishment of the statutory capital of state banks Oshchadbank and Ukreximbank by UAH5.4bn and UAH4.7bn, respectively. Recall, a month ago in February, the Cabinet also injected UAH3.5bn into Oschadbank and UAH3.0bn into Ukreximbank by issuing state bonds as part of their statutory capital. In April, Ukraine received $1.0bn from the IMF and EUR 0.6bn from the EU, which means that state debt will touch $74bn. Further debt accumulation will be conditional on progress with implementing IMF requirements (including pension reform and farmland reform) and on potential demand for Ukrainian Eurobonds in 2H17.
If everything goes smoothly, we might see public debt increasing to $76.3bn (79.0% of GDP) by the year end, which is still below the 89.8% of GDP debt target for 2017 outlined by the IMF.
7.0 FX Source: SP Advisors
Exchange rate 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017F
Official UAH/USD (eop) 7.7 7.99 7.96 7.99 7.99 7.99 15.77 24 27.19 28.5
Official UAH/USD (avg) 5.27 7.79 7.94 7.97 7.99 7.99 11.89 21.84 22.55 28
37 RUSSIA Country Report April 2017 www.intellinews.com