S&P: Ukraine to pay $20 billion of state debt by 2020
According to the assessment of experts from Standar & Poor’s, Ukraine must pay $20 billion of state debt by 2020.
The agency notes that the large payments of the principal debt and interest on it in 2017-2020, amounting to more than $20 billion (nearly 21% of the GDP in 2017) is the primary negative rating factor for Ukraine.
“We expect Ukraine to completely fulfill its short-term obligations regarding sovereign debt in 2017 ($2.7 billion) and in 2018 ($3.9 billion), taking into account the funds of official creditors, the existing foreign currency reserves and the hryvnia in the NBU (National Bank Of Ukraine), and also the government’s ability to attract financing for the internal and external markets,” the report states.
Furthermore, it is noted that the payment of obligations in 2019 ($7.5 billion) depends on the government’s ability to carry out reforms. This primarily concerns the principal sum of sovereign Eurobond debt, and the payments to international financial institutions, including $1 billion to the United States Agency for International Development (USAID).
“The level of ‘net’ debt of the enlarged government remains high for a country with such a low level of income, although we predict that it will decrease by 72.6% by 2020 after growth of up to 88.7% in 2017. From our perspective, the high level of debt means that continuation of the budget consolidation delineated by the government, while maintaining access to the relatively cheap official financing of the IMF and other donors, is critically important for punctual servicing of the debt,” the S&P believes.
It was reported earlier that the S&P confirmed Ukraine’s rating at the level “B-/B”.