IMF: Given Ukraine’s high debt levels, resolving its balance of payments problem also calls for private sector involvement through a debt operation

Given Ukraine’s high debt levels, resolving its balance of payments problem also calls for private sector involvement through a debt operation. The authorities have announced their intention to hold consultations with holders of public debt with a view to improving mediumterm debt sustainability. They have hired financial and legal advisors to help them with this process. While the specific terms of the debt operation would be determined following consultations with creditors, the debt operation would be guided by the following program objectives: (i) generate about US$15 billion in financing during the program period; (ii) bring the public and publicly guaranteed debt/GDP ratio below 71 percent of GDP by 2020; and (iii) keep the budget’s gross financing needs at an average of 10 percent of GDP (maximum of 12 percent of GDP annually) in 2019–2025. The restructuring discussions are expected to begin on the basis of the program’s baseline macro framework. However, the continued applicability of the macro framework informing the operation would be reviewed before the discussions are finalized. The debt operation is expected to be concluded by the time of the first review.

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 http://www.imf.org/external/pubs/ft/scr/2015/cr1569.pdf