Ukraine ranked 53rd among 66 the most vulnerable countries in terms of debt sustainability.
This was announced by the head of the NBU Council Bohdan Danylyshyn on Facebook, analyzing the results of the Economist debt of developing countries rating.
The Economist rate is based on 4 indicators of financial stability: government debt indicators; indicators of external debt (public and private); its value (where it is possible, as the yield on government bonds in US dollars); planned external payments of the current year compared to the volume of international reserves.
According to the rating, Ukraine was among the most vulnerable countries in terms of debt sustainability and ranked 53rd, between Gabon and Ecuador. The latter recently deferred USD 800m payment in bonds for 4 months to overcome the effects of the pandemic.
“Argentina entered this rate, as she missed a USD 500m payment in foreign bonds. If she fails to agree with creditors to exchange securities for less attractive [for investors] until May 22, this will be the country’s ninth default in its history; Lebanon, which defaulted on USD 1.2bn in March, and Venezuela, which owed “barrels” of money [and crude oil] to bondholders, bankers, and philanthropists from China and Russia,” Danylyshyn writes.
The debt service costs in Ukraine is twice as high as in the USA (3.6% versus 1.8% of GDP). Hence the main risk: debt growth at a faster pace than the economy threatens an ‘explosive’ trajectory of public debt, even without additional borrowing.
Read also: Expert believes Ukraine to expect massive labor force migration after lockdown.
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