Ukraine says paid off all debts due in 2009

Ukraine's finance ministry said it had paid off all domestic and foreign debt due this year worth 39.6 billion hryvnias ($4.96 billion) on time.

Ukraine says paid off all debts due in 2009

Ukraine's finance ministry said on Wednesday it had paid off all domestic and foreign debt due this year worth 39.6 billion hryvnias ($4.96 billion) on time and in full.

Analysts and investors had feared all year that Ukraine could have defaulted on some of its debt, given that its chaotic politics combined with a dependence on steel exports have left it particularly vulnerable to the global economic crisis.

The former Soviet state has been often at the centre of rows with Moscow over gas prices and unpaid gas bills, which in 2006 and 2009 led to EU gas supplies being cut in the dead of winter.

Ukraine has been surviving on a $16.4 billion lifeline from the International Monetary Fund, although that programme has now been suspended due to political rowing as the country gears up to a January presidential election.

Although it has not defaulted on any debt, Ukraine's state energy firm Naftogaz did have to restructure its entire foreign debt this year through the issue of a new $1.6 billion Eurobond after it failed to pay off a $500 million Eurobond at the end of September.

Naftogaz' finances have been ailing in recent years as it buys increasingly expensive Russian gas but is forced to keep domestic prices stable.

This year, however, it has paid its monthly bills on time and officials from both Ukraine and Russia have said a New Year gas row will be avoided.

The finance ministry said it had paid up $2.13 billion worth of foreign debt and 22.58 billion hryvnias in domestic debt.

Central bank officials have said it has enough reserves to meet its obligations to the end of the year despite the suspension of the IMF programme.

Valery Lytvytsky, the central bank's top adviser, told Reuters the bank had boosted its reserves by buying $718 million in December as the hryvnia currency slightly strengthened.

On Wednesday however, the central bank sold $15 million on the interbank market as the hryvnia began to slip on demand from importers and foreign companies settling their accounts.

Ukraine's finances have been stretched to the maximum -- budget revenues have slumped while spending continued on social benefits in the run up to the election and also to bail out some banks and stimulate economic growth.

But the authorities have found ways of funding expenditures through various means such as issuing high-yielding short-term domestic debt which the central bank buys with printed money.

The government has helped Naftogaz meet its gas bills in this way.

Some of this year's obligations such as state wages and pensions could be delayed by a few days into the next year, thus using funds from the 2010 budget, analysts have said.

The next Naftogaz payment to Russia's Gazprom -- estimated at just under $1 billion -- also falls due next year on Jan. 11.

Reuters
Last Mod: 30 Aralık 2009, 21:36
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