State Guaranteed Debt

Debt guaranteed by the state is the sum of the debts of economic entities residing in Ukraine resulting from taken and pending loans at the respective reporting date whose re-payment is guaranteed by the state.

According to the law of Ukraine, the sum of the debts of economic entities (only those residing in Ukraine) guaranteed by the state which are taken but still pending at the respective reporting date is considered as “guaranteed public debt”. If the respective economic entity is not able to re-pay its debt, the state budget becomes liable for its re-payment.State guarantees are meant to support the implementation of projects on social and economic development and pose one the most popular forms of financial support for infrastructure development.To improve the efficiency of state guarantees, the Ministry of Finance takes steps to identify and assess loan risks, to minimize them and to monitor their level so that the expenses of the state budget to comply with the state guarantees are lowered.

For every project with state guarantees its relevance and compliance with state tasks and priorities is examined.The new policy on state guarantees which has been pursued since the second half of 2014 emphasizes that these guarantees are not provided for consumption – they are mostly granted for development projects supported by international financial organizations. These projects are implemented in areas like funding of investment, innovation, infrastructure and other development projects which are of strategic importance and which contribute to the economic development of Ukraine.

Also, these are projects aimed to increase the energy efficiency and to enhance the competitive advantages of Ukrainian companies.State guarantees are granted to support projects related to social and economic development and are one of the most popular forms of financial support for infrastructure build-up.To increase the effectiveness of the state guarantees, the Ministry of Finance is implementing a number of measures aimed to identify and assess risks, to minimize them as well as to monitor their level, in order to cut the relevant expenses of the state budget to serve the guarantees provided.

Each project where the state guarantees proper loan payments is analyzed for its relevance and compliance with the tasks and priorities of the state.New policy for granting state guarantees which has been implemented since the second half of 2014 puts emphasis on guarantees being provided not for mere “consumption”, but mostly for development projects supported by international financial organizations. These projects can be related to areas like investments, innovations, infrastructure and other development projects which are of strategic importance and whose implementation will support the economic development of Ukraine. Also important are projects aimed to increase energy efficiency and to strengthen competitive advantages of Ukrainian companies.

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