Head of the Center of Public Finance and Governance at Kyiv School of Economics (KSE) Daryna Marchak said the national budget for 2020 was fully implemented due to the aggressive borrowing policy of the Finance Ministry in December 2020.
“In December 2020, the Finance Ministry borrowed UAH 166 billion ($5.9 billion) to the state budget, or 25% of the revised annual plan. At the same time, the revised annual borrowing plan was fulfilled by 94% in 2020, including by 95% in terms of domestic borrowing and 92% with regard to external borrowings,” she said at an online conference.
According to Marchak, the borrowings in December 2020 were triple the target for this month and double the KSE’s assessment of the Finance Ministry’s ability to carry out internal borrowing, based on the dynamics of borrowings in the past months.
“This amount of expenditure funding became possible only thanks to the restoration of cooperation with international partners, primarily with the IMF and the EU,” she added.
The expert also drew attention to the fact that the funds borrowed by the Finance Ministry in December 2020 were quite expensive and short-term, that is, their significant part would need to be repaid in 2021.
“In December 2020, the volume of borrowings that the Finance Ministry must repay in 2021 increased by a third – from UAH 336.5 billion ($12 billion) to UAH 443.5 billion ($15.8 billion),” Marchak said.
“At the same time, in December 2020, the Finance Ministry had to significantly increase the cost of borrowing. While in the summer months there was a significant decrease in the cost of borrowing to 6-8%, in December 2020, almost every auction was accompanied by a rise in the interest rate to 10-12%,” she added. (UNIAN/Business World Magazine)