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profit. And for 11 months last year, the port paid more than UAH 9M in taxes. The fund emphasized that the Ust-Dunaisk port has great potential for developing logistics for Ukrainian food exports.
Ukraine plans to sell another seaport. The State Property Fund plans to privatize the Bilhorod-Dniester Sea trade port by the end of winter, said the head of the local branch of the State Property Fund, Oleksandr Slavskyi. The port’s privatization was planned before the start of the war due to its unprofitability. The Bilhorod-Dniester port is located on the western bank of the Dniester estuary and has been used by Ukraine since April as a logistics center for the Danube ports. It receives cargo in trucks and transfers it to railcars. In only six months of 2022, the company handled more cargo than it has in the last three years due to Black Sea seaport blockade. Moreover, an auction for the sale of another port asset, the Progress enterprise near Odesa, is scheduled for January 31.
6.2 Debt
Fitch confirmed Ukraine’s likely default. Fitch Ratings has confirmed the long-term default rating of the issuer of Ukraine in foreign currency at the CC level, the agency's website says. This reflects Fitch's view that further restructuring of commercial debt in foreign currency is likely, given the scale of economic damage from the war with Russia and the associated significant financial damage. The agency calls burden-sharing with commercial creditors a likely condition for substantial financial assistance provided by official international creditors. According to Fitch, sovereign external debt service will rise to $5.4B in 2024 (excluding $3.5B in deferred interest payments on Eurobonds that may be capitalized) and $7B in 2025, setting the stage for possible new restructuring. The default rating of the issuer in the national currency is confirmed at the CCC- level.
Some Ukraine supporters are suggesting the West allocate part of their IMF COVID SDR allocation to help the reconstruction of Ukraine with “Brady bonds” style aid.
The IMF decided in August 2021 to issue $650bn in new SDRs globally to provide economies, particularly poorer lower income countries, more fiscal space to tackle the challenges resulting from the COVID-19 pandemic.
In October 2021 the G20 countries pledged to reallocate 20% of their SDR allocations, or about $100bn, to lower and middle-income countries (L&MICs). As SDRs are reserve assets, their reallocation involves no additional fiscal cost to the donor nations. Yet for relatively small economies these allocations have the potential to have a significant positive impact.
As of January 2023 only just under $60bn of the total of $100bn earmarked by G20 for reallocation has been formally committed.
At present there are two IMF vehicles - the Poverty Reduction and Growth Facility (PRGF) and Resilience and Sustainability Trust (RST) - available to facilitate the actual SDR reallocation with IMF oversight.
“We propose creating a third vehicle, a Brady bond style collateralised restructuring facility, as detailed above, in order to create meaningful positive multiplier effects for qualifying countries. The plan could be further extended if other G20 economies follow the French lead and step up SDR allocations to 30% of their allocated quotas. Indeed, this would provide an additional $50bn in financing for further incentive for much more generous debt relief to Frontier
36 UKRAINE Country Report February 2023 www.intellinews.com