Ukraine`s state debt hits 80% of GDP by end of 2015

Thursday, May 5, 2016 - 18:30 (EEST) Section: Latest news

Ukraine`s state and government-guaranteed debt estimated in U.S. dollars decreased by 6.2% to $65.5 billion in 2015, accounting for 80% of the country`s GDP, according to an annual report by the Financial Stability Council, posted on the National Bank of Ukraine (NBU) website.
The Financial Stability Council was set up in March 2015 under a presidential decree in partnership with the financial sector`s regulators chaired by NBU Governor Valeriya Gontareva and the then Finance Minister Natalie Jaresko.
The report says that the debt restructuring was the only effective solution to handle the country`s high debt burden, enabling the nation to avoid a debt default.
In addition, it says that the successful restructuring deal has contributed to an improvement in Ukraine`s sovereign ratings assigned by leading rating agencies such as S&P, Fitch and Moody`s, from pre-default level to B-, CCC and Caa3, respectively, and the rating remain unchanged so far.
As UNIAN reported earlier, on August 27, 2015, Ukraine and the creditors` ad hoc committee agreed on the restructuring of $15 billion in public debt. The restructuring involves a complete write-off of $3 billion, deferral of payments under the principal debt for four years, as well as the establishment of a flat 7.75% interest rate for the bonds.
On November 11, the Cabinet of Ministers approved the terms of the issue of new eurobonds and derivatives to finalize the state debt restructuring process. The new eurobonds were issued in nine separate series worth a total of $11.95 billion and maturing on September 1, 2019-2027. In late April 2015, the government made a decision on an additional issuance and placement of government external loan bonds to the tune of $346.593 million and derivatives to the conditional amount of $84.059 million.
Russia did not participate in the $15 billion restructuring deal brokered late last year.
Though the IMF had changed its policy for lending into arrears to continue financing Ukraine in case of a default on the Russian bonds, it ruled in favor of Moscow by recognizing the debt as state-to-state, not commercial.
However, the Ukrainian government imposed a moratorium on payment of $3 billion debt to Russia because of its refusal to sign a restructuring agreement on an equal basis with private creditors.