Ukrainian companies’ debt reduction exceeded foreign direct investment by 200%.

Ukrainian businesses reduced their net debt over 2022-2024 by increasing their liquid funds and deposits and reducing debt to Ukrainian banks by $21B, which is 200% more than foreign investment over this period and twice as much as in the “most successful year in Ukrainian history”, said Concorde Capital’s Head of Research Oleksandr Paraschiy.

Business loans decreased by $2-2.8B, deposits increased by $16-17.7B, business investment in government bonds increased by approximately $2.4B. This deleveraging can be interpreted as Ukrainian businesses’ unused investment potential and/or a challenge for the Ukrainian economy.

There are several scenarios for how businesses will use these funds after the war. These include an outflow of more than $15B in foreign currency from Ukraine as soon as the NBU’s restrictions on capital withdrawals are lifted, or an increase in accumulated funds and rapid economic growth. In the first scenario, the outflow of funds will not be offset by any private foreign investment, and the likelihood of new investment will be low. As a result, there will be a significant outflow from the banking system, a devalued hryvnia, and weakened economy.

In the second scenario, given the capital accumulation by Ukrainian businesses and spending in Ukraine, investment totaling $40B could be secured.