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№ 7/2019

№ 7/2019

Fìnansi Ukr. 2019 (7): 52–71
https://doi.org/10.33763/finukr2019.07.052

PUBLIC FINANCE MANAGEMENT

BOHDAN Ivan 1, SVIRIDOVSKA Anastasiia 2

1National Bank of Ukraine
OrcID ID : https://orcid.org/0000-0002-1752-0198
2SESE “Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-1112-5584


Restructuring of external public debt in 2015 and its consequences for the fiscal space in Ukraine


The article examines the relationships between fiscal space and the risks of public debt growth related to the issuance of GDP-linked warrants. The authors highlight the point of securing fiscal sustainability via debt fiscal rules implementation and show the relevant experience of emerging markets countries. Based on the recommendations of international statistical standards (GFSM- 2014, PSDS-2013), the authors reveal the problems of information disclosure on Ukraine's public debt. The reclassification of Ukraine's government debt components across the type of instruments and lenders is fulfilled. The authors emphasize the problem of reporting on public liabilities related to GDP-warrants, which are not a part of public debt, according to international standards. Rather, in the future, they can be translated into a direct public debt (when other sources of coverage will be missing). That narrows the fiscal space and mitigates the effects of fiscal rules since huge amounts of future budgetary allocations evade the threshold values of fiscal aggregates. The authors design an economic model that enables to assess the risks of GDP-warrants coming into force (Ukraine’s Government issued this warrants in 2015 in exchange for a haircut on public debt under restructuring). Four scenarios of Ukraine's macroeconomic developments up to 2040 are elaborated, including the data of IMF’s forecast (WEO) and Ukraine’s Ministry of Economic Development and Trade (Sustainable Development Goals). The authors suggest that the cumulative payments on GDP-warrants will amount to 27,2 billion dollars over the next 20 years if real GDP average growth rates approach 4,3% annually, that is 7,5 times higher than a haircut to restructured debt in 2015. The authors’ analysis and computations justify the necessity of reforming the decision-making process within a public finance system. The authors argue that some decisions incur huge losses for the government, narrow the fiscal space and endanger macroeconomic stability in the long run.

Keywords:public finances, public derivatives, public debt, fiscal space, fiscal rules, GDP-linked warrants

JEL: F34, H63, H68


BOHDAN I. . Restructuring of external public debt in 2015 and its consequences for the fiscal space in Ukraine / I. . BOHDAN, A. Sviridovska // Фінанси України. - 2019. - № 7. - C. 52-71.

Article original in Ukrainian (pp. 52 - 71) DownloadDownloads :255
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