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The option of "printing more money" is unacceptable as it would provoke inflation, and so is an option of declaring a default, the official believes.
Chairman of the Council of the National Bank of Ukraine (NBU) Bohdan Danylyshyn says Ukraine can resolve the problem of excessive debt load only by walking a long and evolutionary path, continuing cooperation with the International Monetary Fund (IMF), refinancing debts in the foreign market, and reducing the budget deficit.
"A difficult evolutionary path looks realistic. First, it is necessary to continue cooperation with the IMF and other official creditors of Ukraine to repay peak payments on the currency part of the national debt... Secondly, I agree with the opinion of the Finance Minister – we'll have to borrow in the markets... Third, after smoothing the acute phase of problems with state debt, if we don't want to see it repeat, we won't be able to avoid fiscal consolidation and transition to a balanced budget," he wrote on Facebook on April 16.
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Danylyshyn recalled that the 2019 Budget provides for UAH 418 billion (US$15.59), or almost a third of the national budget, for the repayment and servicing of public debt. Peak payments are expected in May and September of 2019 when $1.7 billion in foreign debt and foreign currency government bonds need to be paid.
The option of "printing more money" is unacceptable as it would provoke inflation, and so is an option of declaring a default, the official believes.
"The best option is that Ukrainian inventors and engineers develop and introduce into production new innovative products with a high share of added value. This will create new markets where Ukrainian products will dominate. The budget will then have much greater opportunities to pay off debts, while the need for borrowing will be much lower. Unfortunately, we have not yet seen the prerequisites for the implementation of this scenario," he added.
UNIAN memo. According to S&P Global Ratings, Ukraine will have to pay about $3 billion in foreign debt, or about 2% of GDP, before the end of 2019. The payments in 2020 will be about $5.5 billion, or nearly 4% of GDP.
Ukraine's key lender, the International Monetary Fund (IMF), estimated Ukraine's gross financing needs in 2019 at 8.1% of GDP, including 2.3% of GDP for financing the budget deficit, and 5.7% of GDP for debt financing.
According to the Fund's estimates, the country's gross financing needs in 2010 will amount to 8.3% of GDP, including 2.3% of GDP to finance the budget deficit, and 6% of GDP to finance debt.