Ukraine's government has "broad opportunities" to refinance short-term debts by issuing government domestic loan bonds with lower interest rates, experts say. Ukraine's state debt could continue rising in the second half of 2010, and might reach 25.9% of GDP by the end of the year, an economist from the Astrum Invetsment Management Company, Oleksiy Blinov, has told Interfax-Ukraine.

According to his forecast, today Ukraine's direct state debt is 23.1% of the volume of GDP for the whole of 2010, according to preliminary calculations by the company.

Blinov added that the aggregate (direct and guaranteed) state debt is 31% of GDP.

The analyst said these figures show that Ukraine's debt load is lower compared to other developing economies (except for oil and gas rich Russia and Kazakhstan, where debt load is less than 10% of GDP). At the same time, the state is facing the problem of dealing with a high short-term debt load. According to prior estimates, in particular, this year the level of debt payments (to cover the principal sum and interest payments) to the state budget income is over 13%.

Blinov added that the government has "broad opportunities" to refinance short-term debts by issuing government domestic loan bonds (GDLB) with lower interest rates. The economist also noted that there is demand for longer-term government domestic loan bonds on the market.

According to Blinov, the increased market demand seen for medium-term government domestic loan bonds was reason for optimism. In particular, during the last auctions on Tuesday, July 27, the volume of sales increased by 39.3% against previous auctions last week (the general amount of sales was UAH 1.54 billion on July 27).