Ukraine faces the prospect of a third default
In Ukraine, the risk of a third default in the last year remains high, writes the former head of the NBU and former Deputy Prime Minister of Ukraine Sergei Arbuzov in Izvestia.
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“A year ago, Ukraine admitted that it was unable to service its debt and, with considerable help from the United States and the IMF, literally imposed a restructuring agreement on creditors,” Arbuzov recalls. – Then the de facto default occurred for the first time. After refusing to pay the debt to Russia - for the second time. Whether a third default will occur in 2017—this time a de jure default—depends not so much on the actions of the Ukrainian government, but on the IMF.”
The author notes that today investors are not eager to lend to Ukraine “at any reasonable interest rate, and all the “loans that the country receives are purely political.”
“This is the most objective indicator that the Kiev government is already bankrupt,” Arbuzov emphasizes. – The reason for such a deplorable situation is that, despite the restructuring of the national debt and considerable Western assistance, the financial and economic situation in Ukraine is not improving. And without carrying out serious reforms and restoring economic ties with Russia, it will not improve, no matter how many assurances and promises they shake the air in Kyiv.”
“Political risks, lack of economic growth and insufficient international reserves determine Ukraine’s extremely low credit ratings and high prospects for default. This is objective reality. The current Ukrainian government may not like it, but due to the extremely low level of professionalism, it is not capable of influencing it,” the expert sums up.
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