Head of the Office for Methodology, Analysis and Forecasting of the Balance of Payments Mr. Serhii Nikolaichuk has provided an update on the gross external debt of Ukraine, which stood at USD 132.4 billion as of 1 October 2012.
“The gross external debt as a percentage of GDP had shrunk by 1.1 percentage point compared with the beginning of the year and stood at 75.3%,” noted Mr. Serhii Nikolaichuk.
According to Mr. Serhii Nikolaichuk, the behavior of absolute indicators of the gross external debt of Ukraine has showed the following trends:
Firstly, the public sector external debt had dropped by USD 1 billion compared with the beginning of the year and amounted to USD 32.4 billion at the reporting date. Overall, this indicator has remained relatively stable over the last two years.
At the same time, the composition of the public sector external debt is undergoing substantial changes. The Government of Ukraine and the National Bank of Ukraine keep repaying the IMF loan, which was obtained by Ukraine during tough economic times to fund the balance of payments deficit and State budget deficit, in due time and in full. The Government of Ukraine is currently refinancing these payments by raising funds in external markets, in particular, through the successful placements of Eurobonds.
Secondly, the banking sector keeps reducing its external debt, which amounted to USD 22.6 billion at the end of the third quarter. This figure is half the stock of external debt recorded before the global financial and economic crisis in 2008. Accordingly, the external resilience of the banking system has strengthened significantly.
“In addition, the share of short-term debt of banks makes up 21% compared with 31% before the financial crisis, giving an indication of the strengthening of the external resilience of the banking system,” said Mr. Serhii Nikolaichuk.
With regards to enterprises of the real sector, they continued to borrow external resources. Over the first 9 months of 2012, the external debt of other sectors including direct investor loans surged by USD 10 billion, amounting to USD 77.5 billion at the reporting date. There are two main driving factors behind the surge in debt. On the one hand, it can be ascribed to a greater use of trade credit to fund foreign trade flows. On the other hand, the surging debt is driven by the heightened investment needs of the Ukrainian economy and, accordingly, the robust demand for financial resources to meet growing investment needs.
According to Mr. Serhii Nikolaichuk, the robust investment demand is expected to increase competiveness of the Ukrainian economy in a mid-term perspective. Accordingly, it will result in a reduction in the stock of external debt of the real sector.