Ukraine’s national debt rose to $180 billion in April – what caused
27 May 2025 05:35
In April 2025, Ukraine’s public debt increased by 5% and reached a record high of USD 180 billion. The main reasons for this growth were the currency revaluation of debts, obtaining financing under international initiatives and macro-financial assistance from the EU. This was announced by the Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Danylo Hetmantsev, "Komersant Ukrainian" reports
According to the Ministry of Finance, as of April 30, 2025, the state and state-guaranteed debt in the hryvnia equivalent amounted to UAH 7,480.3 billion, in the foreign currency equivalent – USD 180 billion.
“As of April 2025, the amount of public debt in hryvnia terms increased by 5% (UAH 357.1 billion), and in foreign currency terms increased by 4.8% (USD 8.2 billion),” Hetmantsev said.
He also emphasized that in the first four months of 2025, the growth rate of public debt was: 7.3% (UAH 499.3 billion) and 8.4% (USD 13.9 billion) in hryvnia and foreign currency equivalent, respectively.
Debts to the EU are the main driver of growth
The main reason for the growth is the increase in debt to the European Union.
“Almost all of the growth in public debt over the 4 months since the beginning of the year in foreign currency equivalent is due to an increase in debt to the EU by USD 13.1 billion,” Hetmantsev added.
This is due to three key factors:
- the strengthening of the euro against the dollar by more than 10% since the beginning of the year, which led to a revaluation of the dollar equivalent of the debt issued in euros;
- attraction of funding under the G7ERA (Extraordinary Revenue Acceleration for Ukraine) initiative, which is accounted for as contingent liabilities. According to the Budget Code and the agreement with the EU (on the EU Credit Cooperation Mechanism, ULCM), they are serviced and repaid not from the budget, but from the proceeds of immobilized Russian assets. The creditor (the EU) has a limited right to demand repayment of such a loan, in particular in the case of reparations for damage caused by the war on the part of Russia.
- attracting macro-financial assistance from the EU (in the amount of $3.3 billion) under the UkraineFacility instrument, which is a concessional long-term loan with interest repaid by the EU.
What about the domestic debt?
Despite the overall increase in public debt, direct domestic debt even slightly decreased in 2025:
- In January-April, the domestic debt decreased by 1.8% (UAH 33.4 billion)
- The reason for this is a decrease in the volume of auction placements of domestic government bonds
The structure of Ukraine’s public debt (as of the end of April 2025)
- 74.5% – external debt, 25.5% – domestic debt;
- 76.4% – debt in foreign currency (foreign currency domestic government bonds), 23.6% – debt in hryvnia;
- 67.7% – fixed rate debt, 32.3% – variable rate debt.
How much money should be received under the ERA program
The ERA mechanism provides for the transfer of funds received from the proceeds of frozen assets to the Russian Federation. ” Kommersant Ukrainsky has covered this issue before.
At the moment, this mechanism is expected to receive a total of $44.1 billion in the period up to the first quarter of 2027. The total announced amount reaches $50 billion.
Last year, Ukraine already received $1 billion, this year it will receive $39.4 billion, next year – $2.4 billion, and in 2027 – $1.3 billion.
How will increased international financial support help?
As noted in the NBU’s latest inflation report, this year Ukraine may receive more significant than previously expected amounts of international financial assistance due to the faster transfer of tranches under the ERA Loans mechanism. These funds will be sufficient not only to finance this year’s budget deficit, but also to create a reserve for public finances for next year, when the volume of foreign aid is likely to decline.
This year’s significant revenues will also allow Ukraine to increase its international reserves to USD 58 billion in 2015. In 2025, the NBU expects to increase its international reserves to USD 58 billion, maintain them at a high level in the coming years, and thus maintain the stability of the foreign exchange market.
The NBU forecasts an increase in public and publicly guaranteed debt to 94% of GDP over the forecast horizon. However, part of this debt will be formed by funds received under the ERA19 mechanism, which will be repaid exclusively from the proceeds of the Russian Federation’s immobilized assets. These funds will not be taken into account when assessing external debt sustainability. In addition, favorable terms of loans from international partners and improved efficiency of domestic public debt management (in particular, through auctions for the exchange of domestic government bonds) will help to reduce the burden on expenditures and free up resources to finance budgetary needs.
