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borrowing remains limited. In 2023, banks increased local bond holdings by $2bn (+15% y/y), individuals and entities by $0.9 bn (+24% y/y), while non-residents reduced their portfolio by $0.3bn (-17% y/y).
Due to the full-scale invasion of Ukraine by the Russian federation, an estimated 174,000km2, or roughly 30% of the country's territory, is potentially contaminated by explosive ordnance (EO) and requires assessment and removal of any landmines. Demining activities are among the most critical needs for humanitarian assistance in Ukraine, as EO contamination not only endangers the lives and well-being of Ukrainian citizens but also significantly hampers economic activities. The clearance of agricultural land deserves particular attention due to its potential to enhance Ukraine's economic stability and food security.
Small-scale producers represent roughly 65% of all agricultural businesses in Ukraine and contribute around 10% of the total production of cereals and leguminous crops. Nearly 9% of these producers' farmland is currently contaminated. In regions located along the frontline, this figure jumps to 19%. The estimated cost of demining is $1,781/ha. The expense associated with ensuring the safety of farmland owned by over 22,000 small producers could amount to as much as $250m.
The Ministry of Finance has attracted almost ₴23B from the sale of OVDP bonds. On October 24, the Ministry of Finance placed domestic state loan bonds (OVDP) for the total amount of ₴22.91B, significantly reducing the rates for securities denominated in hryvnia. The state received ₴3.48B from the sale of annual hryvnia bonds. At the same time, their rate decreased from 17.53% to 17.27% per annum. Also, 22-month bonds attracted ₴4.18B, with the interest rate reduced from 18.35% to 18.15% per annum. Three-year bonds raised ₴4.79B, and their interest rate decreased from 19.18% to 19% annually. Previously, the National Bank included this OVDP issue in the list of reserves. In addition, the Ministry of Finance placed $286.33M in US bonds at 4.79% per annum. Note that the OVDP rate has decreased because bankers expect another discount rate reduction by the NBU at their October 26 meeting by approximately two percentage points - to 18% per annum.
Ukraine raised UAH400bn ($11bn) for the budget in the first nine months of this year with Ukraine’s Ministry of Finance federal treasuring bonds (OVDP) sales, UBN reported on October 4.
The National Bank of Ukraine reported that since the introduction of martial law, a total of over UAH650bn has been raised.
In September, yields for OVDP bonds placed at auctions reached 19.20% per annum in hryvnias, 4.80% per annum in US dollars, and 3.25% per annum in euros.
The majority of these securities are held by banks, primarily acting as primary dealers in the market. The second-largest holder of these securities comprises individuals and businesses within Ukraine.
Notably, the portfolio of military bonds owned by both individuals and legal entities in Ukraine has seen substantial growth. As of October 1, the total value of military bonds held by these entities amounted to UAH58.3bn, a significant increase from UAH34.5bn at the beginning of the year.
76 UKRAINE Country Report November 2023 www.intellinews.com