The Ukrainian government has instructed the Finance Ministry of Ukraine to create tax incentives for investing funds of individuals into government securities and continue issuing government securities for the public, including treasury notes payable to bearer.
According to a plan of measures on the development of the domestic government securities market for the period until 2014 approved by cabinet resolution No. 1059 of December 26, 2012 and published on Thursday, in 2014, the Finance Ministry and the economic Development and Trade Ministry are to introduce new types of government securities, including those with the possibility of their early payment under an initiative of the issuer.
The document also says that proper conditions for the effective functioning of an institution of primary dealers via market making for securities on the secondary market by them and improvement of a mechanism for selection of such dealers at tenders are foreseen.
The plan also includes the improvement of infrastructure of the stock market for reliability and effectiveness of net payment and clearing systems aimed at reducing transactions expenses and the defining of standard approaches to the carrying out of repo transaction with government securities by banks.
The document again confirms plans to conduct active transactions by the Finance Ministry on the debt market (exchange, issue, purchase and buy-out) and optimize the structure of the state dent in favor of increasing the share of the domestic debt.
The government also ordered the Finance Ministry to regularly place government domestic loan bonds with the gradual increase of their circulation and every month to announce schedules for the holding of the said auctions.
According to the State Treasury Service of Ukraine, the borrowing target for 2012 of UAH 98.4 billion has been overfulfilled: as of December 24, 2012, UAH 102.99 billion was received, including UAH 38.77 billion from borrowing on foreign markets.
Some UAH 24.49 billion was planned for servicing of the state debt in 2012, including UAH 24.04 billion paid as of December 24, 2012, including UAH 6.92 billion for the foreign debt.
UAH 66.53 billion was allocated for the payment of the principal of the debt and UAH 65.68 billion was paid as of December 24, including UAH 29.35 billion for the foreign debt.
As of December 26, 2012, government domestic loan bonds worth UAH 187.42 million were in circulation, which is 18.9% up as of early 2012. The government domestic loan bond portfolio of the National Bank of Ukraine grew by 27.1%, to UAH 107.16 billion, that of banks – by 13.3%, to UAH 65.89 billion and that of nonresidents – by 22.2%, to UAH 5.44 billion.
The cabinet said that general payments on the state debt in 2013 will expand to UAH 116.1 billion, including UAH 47.6 billion for the foreign debt.