$17 billion will help Ukraine only if it defers payments on old debts - economists
Moscow - Kyiv, February 13 (PolitNavigator, Mikhail Stamm) - Economists warn that the amount of $17 billion promised by the IMF will be enough for Ukraine only if the economic situation improves and the previous debt is restructured.
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According to calculations by the Washington-based Institute of International Finance, which previously represented the interests of Greek bond holders, the exchange of bonds issued by Ukraine maturing in the next four years for ten-year securities will reduce the need for external financing from $50 billion by about a quarter. According to IIF estimates, this year alone Ukraine needs about $5 billion to recapitalize banks, $8-10 billion to replenish foreign exchange reserves (as of February 1 they amounted to $6,4 billion), $3-4 billion to cover the budget deficit.
According to Dmitry Polevoy from ING Bank, the effectiveness of support will depend on how much assistance will be available to the Ukrainian authorities in the near future. Without an improvement in the economic situation and debt restructuring, loans from the IMF may again not be enough, quotes an expert Kommersant.
The newspaper also reminds that in order to receive a loan, the Ukrainian authorities must begin reforms agreed with the IMF, in particular, freeze the growth of pensions and salaries of public sector employees, increase the amount of taxes collected, carry out banking reform and privatization of state property, and also increase gas tariffs for the population. By April 2017, consumer subsidies, which currently cover about half the import price of gas, should be completely eliminated, the fund said.
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