On August 22, the Government approved a draft resolution of the Cabinet of Ministers of Ukraine on the Approval of the Medium Term Strategy for the State Debt Management for 2018-2020.
“The approval of the updated Strategy and its implementation will not only reduce the level of state debt and increase the efficiency of its management but also improve predictability of trends in the development of public finances in Ukraine and increase the level of trust in our country among Ukrainian and international investors,” says Acting Minister of Finance Oksana Markarova.
For the first time since 2011, the debt-to-GDP ratio in 2017 decreased and began to approach the "safe" value of 60%, as defined by the Budget Code of Ukraine. This was possible due to the improvement of macroeconomic indicators and the concerted action of the authorities regarding fiscal consolidation, monetary policy and implementation of reforms.
The Strategy identifies the task for the Ministry of Finance to reduce debt to 60% in 2018, 52% in 2019 and 49% in 2020. It also sets qualitative goals that will not only reduce the debt-to-GDP level but also improve its structure, and reduce the current risks.
The Strategy presents an indicative action plan for the next two years, which includes, inter alia, the possibility of issuance of government bonds in euros and other currencies with which the Ukrainian hryvnia does not correlate well, issuance of government bonds in hryvnias for international investors, encouraging deeper cooperation with international financial institutions and foreign governments on preferential financing.
Other measures within the Strategy are aimed at strengthening relations with investors, attracting international investors to the domestic market, as well as the improvement of country`s rating as a borrower. Efforts to strengthen institutional capacity will result in the creation of the Debt Management Agency in line with best international practices.
“The debt management strategy is an integral part of the comprehensive Public Finance Management Strategy. The implementation of all of its elements, in particular the introduction of medium-term budgeting, expenditure surveys, fiscal risk control and tax and customs reform, will allow us to accelerate the growth of the economy amidst sustained macroeconomic stability, increase the level of investments and, as a result, improve the welfare of our citizens”, says Oksana Markarova.