Page 41 - Ukraine OUTLOOK 2024

Public debt to GDP is unlikely to exceed 100% going forward. Ukraine will continue to rely heavily on borrowings to patch the gap in the state budget. ICU sees the deficit (before grants) exceeding 10% of GDP at least until 2027, and going below 5% only beyond 2030.
The share of grants will be declining rapidly from about 1/3 in 2022 and 2023. If Ukraine doesn’t start receiving significant reparations, probably in the form of interest income on Russia’s assets, debt will continue to grow rapidly. Yet an increase in nominal GDP will prevent the public debt-to-GDP ratio from surging above 100%. Analysts at Peterson Institute for International Economics (PIIE) see the ratio remaining close to the 80% level at end-2023 and going up to about 90% at end-2024 due to weakening of the hryvnia.
The key event to watch in 2024 is the restructuring of Ukraine’s sovereign Eurobonds. It is certain the debt operation will involve a haircut, a (temporary) decrease in coupons, and a significant extension of maturities with specific terms heavily dependent on assumptions about the length of the war as well as the size/sustainability of foreign financial aid.
Eurobonds will make up only 12% of total debt by end-2024 and substantial haircuts will not change the solvency fundamentals for the economy. PIIE thus expects the government will aim to secure broadly investor-friendly restructuring terms so that it can regain access to the private capital market once war-related risks subside.
• 5.5 Privatisation
Ukraine’s government expects privatisation to attract more than UAH4bn to the budget in 2024, according to the head of the State Property Fund of Ukraine (SPFU), Vitaliy Koval.
The SPFU already possesses 691 properties with a total balance sheet value of UAH4.7bn, allowing it to attract funds from privatisation. The expected asset price growth rate is 170%.
In 2023 the State Fund had already provided UAH3.5bn to the state budget. On November 11-15, 21 online auctions occurred with a total value of UAH 59.46mn.
During the auctions, asset values increased by 220%. Another 34 auctions are planned for the last week in December. Among the largest lots are: shares of Rivne Radio Technical Plant (UAH60.8mn), Ivano-Frankivsk Bakery (UAH52.7mn), Niginsky Quarry (UAH13.2mn), Zhytomyrtorf (UAH3.8mn) and Hannopil Distillery (UAH1.9mn).
One of the largest shopping malls in Kyiv will be put up for sale at a privatisation auction in the second half of 2024. The State Property Fund of Ukraine (SPFU) conducted an Ocean Plaza shopping centre inventory, including financial liabilities. This is one more step toward the sale of the shopping centre, but going to auction is possible no earlier than the second half of 2024, said the head of the SPFU, Vitaliy Koval. He explained that to start the auction procedures, the SPFU will appoint new management, re-elect the directorate, create a supervisory board and change the management company, “which had a Russian footprint," said Koval. The book value of the state-owned portion (66.65%) of the shopping centre is $1.3bn. Earlier, the SPFU noted that the asset will be offered at the auction at this price.
41 UKRAINE OUTLOOK 2024 www.intellinews.com