Oleksandr Parashchiy, Head of Research at Concorde Capital, attended and moderated the meeting, which was moderated by Dmytro Boyarchuk, Executive Director of CASE Ukraine.
We publish the critical points of the speakers’ reports.
Ukraine’s public debt at the end of the first half of the year amounted to $144 billion, with three most significant items:
– $40.5 billion (28%) – domestic debt (government bonds);
– $39.5 billion (27%) – loans from the EU;
– $19.7 billion (14%) – Eurobonds (issued under international law, held by significant private funds from the UK, the US and the EU).
Eurobonds are the most easily restructured, and together with accumulated interest, they account for 16% of the total public debt today.
The balance of Eurobonds before the restructuring is $23.4 billion, of which $19.7 billion is the principal and $3.7 billion is the accumulated interest that we have not paid.
The bonds’ average maturity is 5-6 years, starting September 1 this year and ending in 2035. The average redemption rate is 7.5%.
After the restructuring, 37% of the Eurobond debt was written off, of which 25% ($5.8 billion) was irrevocably written off and 12% ($2.8 billion) was temporarily written off, namely on the condition that Ukraine’s real GDP would be 3% higher than the IMF’s forecast.
The remaining balance of the Eurobonds after the write-off is $14.7 billion.
The main objectives of the restructuring are:
1) the share of debt write-offs, reducing the level relative to GDP;
2) to save $12.2 billion in budget expenditures on debt servicing and repayment;
3) to leave on a good note with Eurobond holders.
We are de facto in default to private funds, but this is not a big deal. Creditors and the Ministry of Finance have agreed on a restructuring, foreign exchange reserves are at record levels, fiscal and monetary policy is standard, and funding from international donors continues.
Compared to the restructuring in 2015, when there was no unconditional debt relief, we have now agreed on a 25% debt relief. However, there is a risk that another iteration of the write-off may be required in 10-11 years, as most of the debt is due in 2034-2036, which could create a significant financial burden.
Ця дискусія створена CASE Україна за підтримки ІСАР Єднання у межах проєкту «Ініціатива секторальної підтримки громадянського суспільства України», що реалізується ІСАР Єднання у консорціумі з Українським незалежним центром політичних досліджень (УНЦПД) та Центром демократії та верховенства права (ЦЕДЕМ) завдяки щирій підтримці американського народу, наданій через Агентство США з міжнародного розвитку. Зміст дискусії не обов’язково відображає погляди ІСАР Єднання, погляди Агентства США з міжнародного розвитку або Уряду США.