In 2015, then finance minister Natalie Jaresko managed to persuade Ukraine’s creditors to restructure the country's debt and delay payments by four years. That postponement is about to expire and Ukraine’s debt payments will ramp up next year to some $5bn a year for the next four years. It is not clear it can meet the payments.

Currently, Ukraine has a total of $16bn of debt outstanding due to be repaid between 2018 and 2020, against a total of just over $18bn gross international reserves (GIR) as of early April.

The peak of the external debt burden is expected in 2020, when Ukraine has to repay $6.75bn, according to a presentation of the National Bank of Ukraine (NBU) e-mailed to bne IntelliNews. Then in 2021 and 2022, Ukraine will have to return another $4.29bn and $4.12bn to external creditors.

That is a lot of money for the struggling country. Last year Ukraine got a highly successful $3bn Eurobond away to high demand, but Eurobond issues on their own are not enough to cover the commitments.

That makes Ukraine highly dependent on money from its main international donor the International Monetary Fund (IMF). So far, Ukraine has received a total of $8.4bn from the IMF out of a $17.5bn stand-by programme agreed in 2015.

However, relations with the IMF are going badly as Ukraine has balked at making most of the deep structural reforms demanded by the multinational lender. The government reneged on an earlier promise on the full extent of tariff hikes to domestic gas prices last autumn. And it has failed to set up the anti-corruption court (ACC) that has become the main demand of the country’s western partners.

Frustration on the part of the donors reached a point at the end of last year where the IMF cancelled the transfer of $1.5bn tranche and the European Union (EU) likewise cancelled a $600mn payment. The stand-by programme has stalled and it is not clear if the IMF or EU will payout anything this year.

The IMF programme has helped Kyiv to recovery from Russia's attempts to destroy its economy via Crimea annexation and military intervention in the Donbas region, but from next year it also become a crucial part of Kyiv’s ability to meet its debt obligations.

The NBU believes that Kyiv will be able to obtain $2bn in loans from the IMF and other donors in 2018, the regulator's deputy governor Dmytro Sologub told journalists on April 12. The Fitch ratings agency also said in a comment that it expects the IMF to pay out $1.9bn to the government this year.

"In 2018, the NBU expects that Ukraine will receive about $2bn in IMF loans, as well as loans from the European Union and the World Bank," Sologub said. "This will push up international reserves to $21.6bn in late 2018."

The IMF money is important as raising more money from the Eurobond market will become harder now that the US Federal Reserve has clearly started to tighten monetary policy, Pavel Gruninin, an analyst with Cbonds argued in a recent bne IntelliNews editorial. "The window of opportunity for [EM] issuers are starting to narrow," Gruninin said.

However, Ukraine can earn its way out of the debt hole by increasing exports and improving the balance of payments. According to Sologub, in 2019-2020, the balance of payments is expected to run a deficit and international reserves will decrease slightly amid peak repayments on external public debt, the official added.

The NBU believes that the main risk to the macroeconomic forecast is that there may be no progress in implementing structural reforms, which is required for maintaining macroeconomic stability and receiving loans from the IMF.

New IMF programme, Eurobonds

Taken all together the government’s plans for financing its debt look worryingly vague. According to estimates of Ukrainian Prime Minister Volodymyr Groysman, the country will repay up to $27bn of its debts in the coming four years, for which the government "needs external support", the PM told a government meeting on May 2.

Groysman did not specify what sort of debt this amount includes. However, he added that "it is an obvious fact that in order to serve our debts, it is necessary that our economy grows bigger, we need investments, so that we receive more revenue to the budgets", according to Interfax news agency.

A new deal will have to be struck with the IMF. According to the NBU's April inflation report, the country is going to secure a new aid package with the IMF by 2020, as the current standby programme expires in 2019.

Clearly new Eurobonds are going to play a key role in the refinancing of Ukraine’s debt. After the successful return of the government to the Eurobond market in 2017, in 2018-2020 the government plans to continue offering, specifically, $2.5bn in 2018, $1.5bn in 2019 and $2.5bn in 2020, the central bank added.

In September, Ukraine placed $3bn in 15-year Eurobonds at 7.375% per annum, after Kyiv mandated JP Morgan, BNP Paribas and Goldman Sachs as bookrunners for its new Eurobonds issue. The deal has become a first market placement for the country since the victory of the popular uprising in February 2014.

But given the country will need to pay back some $5bn a year based on the prime minister’s estimate, it is hard to see how Ukraine will meet its debt bill without a new IMF programme that works.