53 out of 66 rankings
Ukraine ranked 53 out of 66 countries, one of the weakest countries in terms of debt stability. In the context of the study it was announced by the head of the NBU Council Bogdan Danylyshyn The economist.
The British publication published ratings from 66 countries using four indicators of financial stability, including public debt, indicators of external debt (public and private), and its value (possible as yield on government bonds in US dollars). Huh. The current year’s planned external payments were also compared to the amount of international reserves.
According to the ratings, Ukraine ranks 53rd between Gabon and Ecuador. Subsequent people deferred payment of $ 800 million in bonds for four months to offset the effects of the epidemic.
Head of Council of National Bank of Ukraine
According to Danylyshyn, the cost of servicing debt in Ukraine is double that of the United States (3.6% vs. 1.8% of GDP). Hence the main risk: debt growth at a faster pace than the economy threatens an “explosive” trajectory of public debt, with no additional debt.
According to the expert, given the systematic nature of the debt issues, Ukraine needs to perform several tasks To improve debt stability Both at the state and private sector levels. These steps include:
- Optimize and prioritize government spending (focus on investment with a cartoon effect for development).
- Maximum utilization of a cheap resource of official lenders and development program resources (allocated $ 6.8 billion, but not used – NISI study).
- Development of domestic market (NBU can contribute to its growth through monetary instruments and structural measures in the non-monetary instruments segment).
- To increase the demand for government bonds, the government expanded equipment to reduce borrowing costs in hryvnia and domestic borrowing in foreign currency (government bonds ~ 10% on foreign markets, foreign currency deposits ~ 3%).
- Measures to reduce domestic production and consumption (reducing the current account deficit).
- Negotiations with creditors on refinancing external debt (private sector does this – an example of DTEK)
- Currency swap lines with MFIs (same initiative is being discussed by IMF).
- Policy of increasing international reserves.
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Earlier, we wrote that the Finance Ministry of Ukraine started a lending agency that would manage public debt. According to the agency, the model of public debt management with the help of a separate body is implemented in countries of the European Union including Austria, Belgium, Netherlands, Germany, Sweden, etc.
Read: How the amount of cash in Ukraine’s economy has changed – NBU report