Hetmantsev talks about money for budget: Possibilities of domestic borrowing are not yet exhausted
The possibilities of raising money to the budget through domestic government bonds have not been exhausted, with funds from time deposits and local community resources among the reserves.
This was stated by Danylo Hetmantsev, Chairman of the Parliamentary Committee on Finance, Taxation and Customs Policy, in an interview with Ukrinform.
He reminded that the Ministry of Finance and the expert community have repeatedly warned that the possibilities of domestic borrowing are “on the verge”. The parliamentarian disagrees with such statements.
“Yes, the results of borrowing in the first two months of 2025 are significantly worse than in January-February 2024. Through the placement of domestic government bonds, we raised UAH 56 billion, which is UAH 18.3 billion less than in the first two months of last year. At the same time, we redeemed UAH 75.3 billion (in equivalent) of domestic government bonds in all currencies. Accordingly, the rollover (the percentage of overcredit) is 74%. That is, we borrow less than we repay. Whereas last year it was the other way around: this figure reached 164%,” Mr. Hetmantsev emphasized.
But, in his opinion, this should not be seen as a “betrayal” or a “catastrophe.” After all, at the beginning of the year Ukraine had significant balances in the Single Treasury Account, so the Ministry of Finance did not need to additionally raise the amounts that were in reserve (UAH 264 billion in equivalent).
“In addition, in two months, the country received EUR 3 billion of budget financing from the European Commission. That is why, when managing budget liquidity, the Ministry of Finance used the balances at its disposal without increasing borrowings,” explained the Chairman of the Verkhovna Rada's Finance Committee.
He reminded that this year's plan to place domestic government bonds is UAH 579 billion. Up to 10% of the required amount has already been raised. The MP is convinced that in the coming months the pace of fulfillment of the government securities issue plan will increase. After all, the limit for auction placements of domestic government bonds has not been reached.
“First, we have a significant resource of household and business savings on bank accounts. In particular, 70% of bank deposits in hryvnia (UAH 1.27 trillion) are demand deposits. And the NBU has the tools to encourage banks to increase their time deposits and invest this money in government bonds. Next up are local governments. In total, their portfolio of domestic government bonds is only 0.04% of the number of bonds in circulation. We are also waiting for non-resident portfolio investors to return. Especially if we achieve sustainable peace. The portfolio of domestic government bonds owned by such lenders is only 1%, while in 2019 this share reached 14%. So, we also have a good reserve,” Hetmantsev elaborated.
As reported, on March 11, the Ministry of Finance raised UAH 8.5 billion to the state budget at an auction for the placement of domestic government bonds. The first issue of domestic government bonds in our country took place on March 10, 1995. Over the past three decades, Ukraine has placed over UAH 3.3 trillion worth of domestic government bonds on market terms.