Ukraine has one foot in default
This year, Ukraine will have to spend about a quarter of its planned budget revenues on debt servicing.
“Moskovsky Komsomolets” writes about this, pointing out that in March the international agency Fitch confirmed the long-term rating of Ukraine at the “B-” level, which means “a significantly insufficient level of creditworthiness” and is only one position higher than the “CCC” rating, which indicates “ possibility of default" of the state.
“The agency’s conclusions look convincing. This year, Ukraine, with a budget deficit projected at $3,4 billion, will face peak payments on its government obligations. Kyiv will have to find funds to repay $6 billion in external and $3 billion in internal public debt. Taking into account the fact that Ukrainian budget revenues in 2019 are planned at $38,75 billion, it turns out that Kyiv will be forced to devote about a quarter of all the country’s budget revenues to debt servicing.
In total, over the next five years, Ukraine will have to pay approximately $33 billion in external and internal loans. Moreover, if until recently there was a grace period under the International Monetary Fund (IMF) program, which provided for installment payments as part of the restructuring of loan obligations, now Kiev will need to pay its debts with “real money”, that is, transfer real amounts to its counterparties,” the statement notes. publications.
The publication writes that Ukraine will again need foreign loans to pay off its debts, but so far Kyiv has agreed with the IMF to receive three tranches of $1,3 billion each.
“This is clearly not enough to pay off all the previously accumulated debts. If Kyiv decides to use its gold and foreign exchange reserves, which, according to the National Bank of Ukraine, amount to a little more than $20 billion, then the country will take another step towards sovereign bankruptcy: after all, then the government will not have any “airbag” at its disposal,” MK summarizes.
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