Ukraine's gross public and publicly guaranteed debt in October 2010 rose by 0.3%, to USD 51.2 billion, whereas in the first ten months of 2010 it grew by 28.7%.

According to the Sokrat investment group, an increase in public debt is expected. The debt amounted to 38.1% of GDP in October 2010, which was significantly below the 60% threshold for countries with transition economies.

Experts expect public debt to grow to USD 54 billion (40% of GDP) by the end of this year, including at the expense of USD 1.6 billion as the second tranche of a loan from the International Monetary Fund.

According to Oleh Ivanets, an analyst at the Art Capital investment group, after a four-month rally in June-September 2010, when the government increased public debt by USD 2 billion each month (loans from VTB and the IMF, VAT bonds and Eurobonds), in October, as expected, there was a full lull.

"As for projections, then we have slightly downgraded our forecast for public debt by the end of this year, from USD 55 billion to USD 54 billion. The reason is that the earlier announced plans to conduct an additional capitalization of banks (UAH 24 billion) were postponed because of disagreements in this issue with the IMF after reports in the media that a significant portion of funds earlier directed to recapitalize banks has been used improperly," Ivanets said.

At the same time, a loan of USD 2 billion will most likely not be returned to VTB this year, the expert said. Other important funds, namely, the next tranche of the IMF loan (USD 1.6 billion) and loans from the European Bank for Reconstruction and Development and other European institutions for EURO 2012 infrastructure projects (over USD 1 billion) are to be raised before the end of this year.

In particular, the European Bank for Reconstruction and Development allocated USD 450 million to Ukravtodor in November, and the company is to receive another USD 450 million as part of this project from the European Investment Bank.

Experts from Eavex Capital expect public debt to resume growth in the next two months, and, depending on the needs and appetites of the government, it will reach USD 52-55.5 billion by the end of 2010.

Even if the government decides to repay USD 2 billion received from Russia's VTB Bank, this should be compensated by the second tranche of the IMF, which is expected in December 2010, experts said.

In addition, the government may additionally place domestic bonds worth USD 2.5 billion in order to cover the budget deficit. Eavex Capital's experts also expect publicly guaranteed debt to rise by USD 0.6-1.2 billion at the expense of guarantees to state-owned companies, including to Ukravtodor.

As of September 30, 2010, Ukraine's gross public debt increased to USD 51.09 billion, from USD 48.305 billion as of late August 2010.

UKRINFORM