Business news from Ukraine

Prime Minister of Ukraine thanks external creditors for postponing public debt

Prime Minister of Ukraine Denys Shmyhal has thanked foreign investors for their decision to defer payments on Ukraine’s external debt until 2024.
“Investors in Ukraine’s external debt gave their consent to defer payments until 2024 with a possible extension for another year. Thank you for the step of solidarity. We are also grateful to the G7 countries for supporting this position,” Shmyhal wrote on his Telegram channel on Wednesday.
He said that thanks to this decision, Ukraine will save almost $6 billion on payments over the next two years.
“These funds will help us maintain macro-financial stability, strengthen the stability of the Ukrainian economy and increase the power of our army,” the head of government said.
The prime minister added that the holders of securities of the state-owned Ukrenergo and Ukravtodor also accepted the postponement offer, thanks to which Ukraine could better prepare “for the most difficult heating season in history and more effectively restore infrastructure destroyed by Russian terrorists.”

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Ukraine is accurately servicing its public debt – International Monetary Fund

Ukraine is accurately servicing its public debt, and the International Monetary Fund (IMF) expects that this situation will continue, but they call for supporting the country with grant financing.
“At the moment, Ukraine is servicing its debt in an orderly way. And we would expect that to continue,” IMF spokesman Gerry Rice said at a traditional briefing on Thursday.
Asked about the lack of recommendation to Ukraine to request freezing of payments or something like that, Rice noted that he had no other position than the one stated above.
“We’ve been supporting them with a program loan of $1.4 billion. We’ve supported them from the SDR, the SDR allocation. We’ve established the administered account for donors to support Ukraine. Canada, Germany, the Netherlands have all stepped in so far. We are expecting more in the coming days,” he said.
“What we see as the priority in terms of financing for Ukraine right now is grant financing. In in the short term that’s the best form of assistance that can be provided by the international community in light of the war situation and the nature of the shock. And that would allow the Ukrainian government to remain operational without incurring further debt,” he added.

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THE MINISTRY OF FINANCE OF UKRAINE RAISED THE FORECAST OF PAYMENTS ON PUBLIC DEBT IN 2022 TO UAH 572.26 BILLION

The Ministry of Finance of Ukraine in March raised the forecast for payments on public debt in 2022 by UAH 4.93 billion compared to the March forecast – up to UAH 572.26 billion, according to the forecast for April on the agency’s website.

According to him, the largest amount of payments falls on April-June of this year – UAH 167 billion, while in August-September it is projected at the level of UAH 145.32 billion, in October-December – UAH 124.63 billion.

The Ministry of Finance estimates payments on domestic debt in 2022 at UAH 440.95 billion, and on external debt at UAH 131.32 billion.

According to the Ministry of Finance, on a monthly basis, the largest amount of payments fell on February – UAH 75.78 billion, and May – UAH 69.59 billion.

At the same time, the ministry increased the forecast of payments on public debt in 2023 by UAH 25.71 billion to UAH 400.91 billion.

In 2024, the ministry expects a payment in the amount of UAH 348.74 billion.

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VOLUME OF PUBLIC DEBT OF ALL COUNTRIES IN 2022 WILL REACH RECORD $ 71.6 TRILLION – EXPERTS

The volume of public debt of all countries of the world in 2022 will increase by 9.5% and reach a record high of $71.6 trillion, according to the Sovereign Debt Index study by the British management company Janus Henderson.

In 2021, global public debt rose by 7.8% to $65.4 trillion, with an increase in borrowing observed in all countries covered in the study.

In the meantime, the total cost of servicing the debt has fallen to $1.01 trillion, that is, the actual rate was only 1.6%, according to CNBC research.

In 2022, global public debt service spending is expected to jump 14.5% to $1.16 trillion.

Analysts Janus Henderson believe that the UK will face higher borrowing costs than other countries due to higher interest rates of the Bank of England and a significant amount of government debt with floating rates tied to inflation. Domestic consumer prices jumped 6.2% year-on-year in February, the fastest pace since March 1992.

European countries will also actively place government bonds due to the need to sharply increase government spending on defense in light of the military events in Ukraine, said Bethany Payne, portfolio manager at the company.

PUBLIC DEBT FOR HOUSING SERVICES RAISES UP BY 12% IN 2021

The debt of the population of Ukraine for payment of housing and utilities services in December 2021 increased by 12% compared to November and amounted to UAH 73.7 billion (excluding electricity).
According to the State Statistics Service, in general, in December 2021 Ukrainians paid UAH 21.6 billion for housing and utilities services, which amounted to 71.1% of the amount accrued for this month.
The debt for the supplied electricity in September amounted to UAH 7.7 billion.
The highest level of payment for housing and communal services in December 2021 was recorded in Kirovohrad (82.3% of the amount of charges), Odesa (81%), Cherkasy (77.2%) regions.
The lowest level of payment is in Dnipropetrovsk, Luhansk, Chernivtsi regions (66.9% of the amount of charges). In Kyiv, the level of payment was 68%.
According to the State Statistics Service, since the beginning of 2021, some 58,300 agreements have been concluded with the population on the repayment of restructured debt for housing and communal services for a total amount of UAH 531 million. The amount of payments made, taking into account long-term contracts, was UAH 312 million.
The data are given without taking into account the annexed Crimea and Sevastopol, as well as parts of the temporarily occupied territories of Donetsk and Luhansk regions.

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UKRAINE’S PAYMENTS ON PUBLIC DEBT TO EXCEED $10 BLN IN NEXT 12 MONTHS

Ukraine’s FX payments on public debt will exceed $10 billion in the next 12 months, the National Bank of Ukraine said in its June Financial Stability Report.
“In the next 12 months, only FX payments by the government and the NBU on the state and guaranteed debt will exceed $10 billion. In the hryvnia segment of the market, repayment of principal and interest in the second half of the year will exceed UAH 130 billion,” the central bank said on its website.
The regulator said that the schedule of debt payments in the next three years remains tight. However, the load is distributed relatively evenly, which should not create significant problems for the Ministry of Finance, although the average volume of auctions should still grow.
According to the report, the financing needs may be mitigated by the additional issue of special drawing rights (SDRs) in the amount of $650 billion being discussed by the International Monetary Fund (IMF) to support the global economic recovery.
“If the IMF Executive Board approves the decision, Ukraine will increase its FX reserves by about $2.7 billion, the NBU said in the report.

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