REUTERS
S&P predicts Ukraine may get about $3 billion in 2019 under a new program with the International Monetary Fund.
Ukraine's government in 2019-2020 will have to repay about US$5.5 billion in foreign debt obligations, which account for nearly 4.5% of the country's GDP.
"Ukraine faces substantial external debt repayments in 2019 and 2020. The government has about $5.5 billion (about 4.5% of GDP) of debt obligations, including interest, coming due in both 2019 and 2020. In addition, repayments toward government foreign currency debt in the domestic market total about $3 billion (2.3% of GDP) in 2019," S&P Global Ratings said in a statement on Ukraine on October 19.
S&P predicts that in 2019, Ukraine may get about $3 billion under a new program with the International Monetary Fund (IMF).
"We assume that Ukraine will draw about $3 billion in 2019 from the new IMF program. These inflows would go directly to boosting the foreign currency reserves at the central bank and would not be available for sovereign foreign currency debt repayments," it said.
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However, S&P assumes that the new arrangement would also unlock additional donor financing of about EUR 1 billion from EU macrofinancial assistance and $800 million in World Bank guarantees. "We also assume proceeds from fresh sovereign eurobond issuance will cover external financing needs, as will some proceeds from hryvnia-denominated bond issuance in the domestic bond market. Together, these funds should help Ukraine meet its external foreign currency debt repayment needs in 2019," the rating agency said.
Absent the IMF funding and additional donor funds tied to the IMF program, S&P experts continue to see a risk of marked deterioration in Ukraine's external financing, given its large refinancing needs.
"We believe the government is unlikely to be able to raise the full amount of foreign currency financing it needs in 2019 in the domestic bond market," they said.
They also note that there is a residual risk for Ukraine's government balance sheet from the $3 billion eurobond issued and bought by Russia in 2013, which was not restructured.
As UNIAN reported earlier, Ukraine's payments on foreign state debt in the fourth quarter of 2018 (Q4) were estimated at UAH 17.247 billion (or US$615 million at the current forex rate of the National Bank of Ukraine).
The IMF and the Ukrainian authorities earlier reached agreement on economic policies for a new 14-month Stand-By Arrangement (SBA) worth US$3.9 billion, which is to be approved by the IMF's Executive Board. The new SBA will replace the arrangement under the Extended Fund Facility (EFF), approved in March 2015 and set to expire in March 2019.
Board consideration is expected later in the year following parliamentary approval of a Ukrainian government budget for 2019 consistent with IMF recommendations and an increase in household gas and heating tariffs to reflect market developments while continuing to protect low-income households.
Ukraine's state and government-guaranteed debt, estimated in U.S. dollars, shrank by 1.9%, to $74.85 billion in January-August 2018, while the debt in the hryvnia equivalent declined by 1.2%, to UAH 2.117 trillion.