Ukraine's Finance Ministry predicts payments on Ukraine's GDP-linked warrants, also known as Value Recovery Instruments (VRIs), which were issued as part of debt restructuring in 2015, are unlikely possible in the medium-term outlook.

This is stipulated in the government-approved Strategy for Public Debt Management for 2018-2020.

"According to the current forecasts for nominal GDP, reaching the threshold for making payments on these instruments is unlikely in the medium term," the document, available to Interfax-Ukraine, says.

It notes that these state-owned derivatives with contingent payments estimated at $3.2 billion and the period of circulation until 2040 are not part of the country's state debt.

Payments for the GDP-linked warrants will be handled annually in U.S. dollars from 2021 to 2040, depending on dynamics of real GDP growth in Ukraine in 2019-2038.

If GDP growth for the year is below 3% or real GDP is less than $125.4 billion, then there will be no payments on the instruments. If real GDP growth rises from 3% to 4%, the payment on the securities will make 15% of the excess of GDP over 3%, and if more than 4%, then there will be plus 40% of the excess of GDP over 4%. In addition, payments are limited to 1% of GDP from 2021 to 2025.

The strategy is based on the forecast for a 3% annual increase in real GDP in 2018 and 2019 and a 3.8% increase in 2020. Nominal GDP in U.S. dollars, according to the estimates in the document, will increase from $106.3 billion last year to $110.7 billion this year, further to $134.2 billion next year and $147.4 billion in 2020.

The official forex rate in 2019 is expected to strengthen to UAH 29.4 per U.S. dollar after its weakening from UAH 28.1 to UAH 30.1 per U.S. dollar this year. The official forex rate in 2020 is projected at UAH 30.2 per U.S. dollar.