Ukraine may default as early as Friday
The Minister of Finance of Ukraine, American Natalya Yaresko Ann, said in a commentary with the BBC, that I am very glad that Ukraine is not Greece and fulfills all the requirements of the IMF.
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“The country could be on the verge of defaulting on some of its international debts as soon as Friday,” the BBC reports.
Ukrainian Prime Minister Arseniy Yatsenyuk was in the United States to reassure Washington that the government is making progress in solving economic problems, fighting corruption and for peace in the Donbass.
But at the same time, Ukraine faces a payment day for international creditors this week. The situation is very reminiscent of the Greek one. On July 24, the deadline expires for the regime of President Petro Poroshenko to pay interest of $120 million to international creditors. If officials fail to do this, Ukraine will become bankrupt by default.
Kyiv is currently in negotiations with a consortium of international creditors who control about $9 billion of Ukraine's outstanding debts out of a total of $19 billion.
Ukraine proposes a reduction of 40% or a write-off of the entire amount. The consortium led by the US company Franklin Templeton is resisting any discount, and instead is proposing to extend the repayment period.
While the $120 amount is not huge, Ukraine would prefer not to pay it at all to avoid any depletion of its already plummeting foreign exchange reserves, and to avoid showing weakness in negotiations.
To that end, Ukraine's parliament voted in May to allow the government to impose a "moratorium" on all cross-border payments if necessary.
“What will happen if Ukraine defaults on its loans is not clear,” the agency reports.
Natalya Yaresko, Ukraine's finance minister, says the moratorium's impact on the economy will be minimal and could actually help debt negotiations.
“I am convinced that if we use this tool, it will be only temporarily, and that it will only be used to continue and speed up the discussion and not for any other reason,” she said. Jaresko also denies any comparisons with Greece.
“I'm glad we're not Greece. I'm glad that our situation is completely different. In Greece, there are more reasons to agree with their refusal to reform,” says the Minister of Finance, calling the reforms the enslaving demands of the IMF.
The Ukrainian parliament passed a series of laws last week that the International Monetary Fund had sought approval before it would release a $1,7 billion tranche as part of a $17 billion program.
Let us recall that as a result of the referendum in Greece, the Greek government was able to ease the pressure of the IMF and international lenders on the internal life of the country and increase the amount of loans to almost $90 billion.
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