Photo: NBU

In 2026, Ukraine may reprofile inflation-linked domestic government bonds worth UAH 145.2 billion, according to the website of the Budget Committee of the Verkhovna Rada.

Article 19 of the state budget law, adopted on December 3, grants the Ministry of Finance the right to exchange government bonds held by the National Bank of Ukraine (NBU) for new bonds under terms agreed with the NBU.

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The NBU has indicated it would only agree to exchange a portion of the bonds.

As of January 1, 2026, the nominal value of the NBU’s portfolio of domestic government bonds is expected to reach UAH 664.5 billion. If the new bonds were redeemed evenly over the next 50 years, as proposed in the budget, annual redemptions would total UAH 13.3 billion. However, the NBU considers these conditions unfavorable.

“The annual redemption of the NBU’s current portfolio of domestic government bonds in 2026–2032 is expected to range from UAH 11 billion to UAH 12.3 billion. The NBU does not see the feasibility of a transaction under the proposed terms over the next five years due to potential negative consequences, including losses or a significant decrease in the NBU’s income, which would reduce transfers to the state budget from the NBU’s distributable profit,” the NBU explained.

At the same time, the NBU and the Ministry of Finance are considering a smaller transaction — the exchange of 2017 inflation-linked government bonds with a nominal value of UAH 145.2 billion for new bonds, at a rate that would allow the NBU to break even while reducing the Ministry’s coupon payments.

  • The NBU’s “inflation-linked” government bonds first appeared in the portfolio during a reprofiling operation in 2017, when the government exchanged UAH 219.6 billion in bonds maturing between 2017–2030 for new bonds maturing in 2025–2047.
  • During that operation, the interest rate on the bulk of the securities (UAH 145 billion, or roughly two-thirds of the total) was tied to inflation — meaning higher inflation increased the cost of servicing the bonds for the state budget.