Ukraine’s public debt decreases 3.7% m/m in March

Макроэкономика 23.05.2014 Public debt fell 3.7% m/m (USD 2.5 bln) down to USD 65.8 bln in March 2014, according to Ministry of Finance data released on May 21. External debt decreased 0.5% (USD 0.2 bln) while internal debt fell 7.4% (USD 2.3 bln) throughout the month. The share of external debt increased to 56.1% (from 54.3% the prior month). Alexander Paraschiy: Hryvnia devaluation was the main reason why public debt, in US dollar terms, was reported falling in March. In local currency terms, it increased 5.7% m/m. For instance, internal debt increased 1.6% m/m (UAH 4.9 bln) in March. As regards to the external debt, IMF redemption (USD 193 mln) stands behind a minor decline in March. In April we should see a very similar tendency given the further hyrvnia devaluation throughout the month, no external borrowings, and USD 660 mln in redemptions to the IMF. At the same time, beginning in May we should see a reverse of the trend on the back of a USD 3.2 bln wire from the IMF, USD 1.0 bln proceeds from Eurobond placement, and some inflow from the EU’s financial support. Against this backdrop we anticipate public debt to increase to near 53% of GDP by the end of the year vs. estimated 48.7% as of end-March.