As of June 30, 2024, Ukraine's public and state-guaranteed debt reached a record high of UAH 6.16 trillion, equivalent to USD 152.2 billion. In particular, external debt amounted to UAH 4.45 trillion ($109.9 billion), and internal debt amounted to UAH 1.71 trillion ($42.2 billion).
This level of debt is a serious challenge for the country's economy, but it is worth noting that the debt to GDP ratio of Ukraine does not yet exceed 100%. For comparison, at the end of World War II, the ratio of Britain's GDP to its national debt reached 250%, demonstrating that countries can rebuild their economies even after such extreme levels of debt.
During the second quarter of 2024, Ukraine's public debt increased by UAH 243.7 billion, or USD 1.1 billion in dollar terms. Despite this increase, the weighted average value of Ukraine's public and state-guaranteed debt decreased by 10.3% since the beginning of the year, from 6.24% to 5.6%. This indicates some stabilization of financial markets and a reduction in the risks associated with government lending.
The growth of public debt during war is a completely natural phenomenon, especially when a country acts as a victim of aggression. Ukraine is forced to raise additional funds to finance defense and social spending in wartime, which leads to an increase in debt.
However, one possible option to alleviate the debt burden is to lobby for the cancellation of part of the external debt at the expense of frozen Russian funds. This approach could be key in reducing the financial burden on the Ukrainian economy.
Regarding domestic debt, the government is considering increasing taxes and other budget revenues. If the relevant bill is supported by the Verkhovna Rada, it is planned to place an additional UAH 220 billion in domestic government bonds (OVDP) by the end of the year. This will allow attracting additional funds to finance state needs, but may also increase the debt burden.
