Ukraine’s national and state-guaranteed hryvnia-denominated debt has more than doubled since the beginning of 2022, reaching 6.01 trillion hryvnias (about $152 billion) at the end of April 2024. Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Danylo Hetmantsev emphasized, that, despite the significant growth of the national debt, these indicators do not indicate a catastrophic situation of the economy.
Hetmantsev explained that the increase in the national debt during the war is an inevitable phenomenon, characteristic of all major military conflicts, which are financed through tax increases, debt build-up and aid from allies.
According to IMF estimates, Ukraine’s public debt-to-GDP ratio will rise to 94% in 2024, compared to 49% in 2021, due solely to full-scale war.
Hetmantsev assured that Ukraine will continue to fulfill its obligations as a responsible debtor, avoiding unilateral default, but at the same time restructuring part of the foreign debt to ease the burden on the budget during the war. The state will also continue to fully service domestic government loan bonds (OVDP).
The head of the financial committee outlined two key events that will determine Ukraine’s debt dynamics in the near future:
- The restructuring of the state debt to commercial external creditors, which should be completed by August this year.
- Securitization of revenues from frozen Russian assets with the aim of providing Ukraine with a soft loan in the amount of up to 50 billion dollars, starting in 2025.
- Hetmantsev expressed reasonable optimism about the positive outcome of both events for Ukraine, stressing that the country remains in the IMF program, which provides an additional framework for long-term public debt sustainability.
We will remind that earlier Danylo Hetmantsev emphasized the importance of paying taxes to finance the army, noting that the main source of financing is not the funds of international partners, but tax revenues.
