The coming crisis will be as painful as possible for Ukraine
By attracting speculative capital into government bonds at high interest rates, the government of Ukraine and the NBU have prepared the ground for the fall of the hryvnia in the near future and are holding its rate only so that speculators withdraw their money.
Economist Viktor Skarshevsky stated this at a press conference in Kyiv, a PolitNavigator correspondent reports.
“Ukraine, the Ukrainian government, instead of preparing for a crisis, did everything possible so that the already predicted, expected global crisis would have the most negative impact on the Ukrainian economy, on the Ukrainian currency and on the well-being of Ukrainian citizens. How? They took and released speculative capital into Ukraine, which entered Ukraine throughout 2019 and in January 2020, in government bonds.
The yield on Ukrainian domestic debt was in first place in the world, the state of Ukraine paid the most money to purchase its debt. But these interests were not paid by the state, but by you and me as taxpayers. Non-residents earned up to 40% per annum in foreign currency last year on government bonds. We paid for it all.
It turns out that hot speculative money came in in the amount of about 5 billion dollars. And now, when the next global financial crisis began to unfold, naturally, all non-resident speculators began to withdraw their money from high-risk assets, from developing countries. And Ukraine is one of them. And what does the National Bank do? Sells ZRV, last week he sold more than $300 million to help speculators withdraw their money from Ukraine.
Has devaluation already begun? and the National Bank are also actively selling currency from gold and foreign exchange reserves instead of allowing the hryvnia to devalue naturally. If speculators had not been allowed in last year, then now there would not have been such phenomena as the withdrawal of speculative capital from Ukraine. And this will further intensify the negative process. Instead of preparing for the crisis, both the government and the NBU did the opposite, so that this crisis would be as painful as possible for Ukraine,” the economist concluded.
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