Ukraine: Government to cut public debt to 60% of GDP in 2018

The government is going to cut public debt to 60% of GDP by the end of this year, acting FinMin Oksana Markarova has told the cabinet. Earlier the FinMin’s goal was to cut debt to 62% by end-2018. Presenting an updated mid-term debt strategy to the cabinet, Markarova said the goal for end-2019 is now 52%, rather than 58% earlier, and the goal for end-2020 is no more than 49% of GDP. Last year direct public debt declined to 61.5% from the peak of 69.2% of GDP in 2016, and total public debt, including guaranteed debt, declined to 71.8% from 80.9%, according to the FinMin.

The FinMin noted in its presentation that the share of foreign debt in total debt in Ukraine is higher than in other similar countries and regional neighbours. On June 30, foreign debt amounted to 56.7% of total debt. In the structure of public debt, domestic hryvnia-denominated debt accounted for 36%, followed by Eurobonds (31%), debt to IFIs (23%), domestic FX-denominated debt (7%) and ‘other debt’ (3%).

The FinMin is going to increase the share of hryvnia-denominated debt and long-term debt in the medium term, simplify access to Ukrainian debt for foreign investors, attract more loans from IFIs and foreign governments, buy back some of the domestic bonds to mature in 2019-2020, and cut the state share of the banking sector in line with the updated strategy. Currently state-owned banks account for more than half of the banking sector assets.

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