Page 48 - UKRRptSept22

6.2 Debt
Ukraine must pay $10B in debt by the end of the year. In the third and fourth quarter of 2022, the government, the National Bank, and Ukrainian enterprises must pay $10.1B, of which $7.8B is the principal debt amount and $2.2B in interest, according to the planned payment calendar for external debt to non-residents in foreign currency. According to the NBU schedule, peak payments fall in the third quarter of 2022 with $5.57B, and the rest in the fourth quarter for $4.5B. By the end of the year, Ukraine must pay back $1.17B to the IMF, including $157M in interest. It will also be necessary to pay UAH 14.6B to non-residents who own Ukrainian government bonds. According to the plan, the government, the NBU, and enterprises must pay $6.1B in the first and second quarters of 2023, including $3.87B in the first quarter and $2.2B in the second quarter.
Ukraine has several payments due to the IMF this year (estimate): $1.2 bn in 2H 2022, $2.8 bn in 2023, $2.8 bn in 2024 and payments to other IFIs ($0.4 bn, $0.9 bn, and $1.7 bn, respectively).
Scarce foreign funding is forcing the National Bank of Ukraine to buy government bonds (effectively printing hryvnia) to cover the enormous budget deficit, which reached $4bn in May and almost $6bn in June.
In March to May 2022, the government’s own revenues covered just about 40% of the expenditures needed to run the country and pay the bills. Another 40% was covered by the National Bank of Ukraine. The rest is funded by grants (about 7% of expenditures during three months of the full-scale war), foreign loans, and local bond issues. ... on July 20 Ukraine asked Eurobond holders for a standstill, because the commercial debt servicing becomes too much of a burden for the budget, as well as from the balance of payments prospective.
That standstill was granted by the bondholders. It buys Kyiv $5.9bn in relief over the next two years. But that only covers a small part of the financial shortfall. In the meantime,
The National Bank of Ukraine (NBU) was selling up to $1bn per week to keep up with the pace of foreign currency demand and to defend the exchange rate peg. On July 20, the decision was made to shift the peg upwards, to 36.60 hryvnias to a dollar from 29.25 hryvnias to a dollar. Ukraine’s foreign currency reserves stood at $23bn as of the end of June. The current pace of losses means that Ukraine will be shortly on the verge of financial collapse if aid inflows are not sped up.
Ukraine’s situation is made worse by the disruption of its economy due to the war, the dislocation of its foreign trade by the Black Sea blockade and by the economic activity of its citizens who are now refugees spread out across Europe. Of the 5mn Ukrainian refugees, many are working remotely. All of them are spending money from their Ukrainian bank accounts. The result is a monthly drain of c. $1.5bn at the expense of Ukraine’s foreign exchange reserves.
48 UKRAINE Country Report September 2022 www.intellinews.com