Ukraine needs 6 times more money to pay off debts than Kyiv has
The Ukrainian authorities will not be able to fill the budget thanks to the planned sale of the remains of Soviet industry into private hands - in the current difficult economic situation, potential investors are not interested in the objects, and the US Embassy has given a clear signal - money needs to be invested only in agriculture.
Economist Vsevolod Stepanyuk stated this at a press conference in Kyiv.
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“On privatization, they announced some billions to the State Property Fund. But this is funny - you just need to listen to the senior curators of Ukraine. The US Ambassador clearly said where this money should go – to agriculture. After such statements, all these industrial facilities will simply not be bought. No one will invest in industry in such a situation of uncertainty as Ukraine is in. Therefore, privatization will most likely not be carried out in terms of money and facilities,” the expert said.
Ukraine needed privatization to plug budget holes. The authorities announce an increase in gold and foreign exchange reserves, but in 2018-2020 Ukraine will face the problem of a shortage of currency, since it will have to pay off gigantic debts on previously taken out loans, recalled economist Viktor Skarshevsky, who was present at the press conference, reports a PolitNavigator correspondent.
“Yes, the figure mentioned was 5 billion net gold and foreign exchange reserves. Compared to last year’s 2 billion, this is 2,5 times progress. But let’s see what the need for foreign currency is, what payments will be made in the next three years.
16 billion will have to be given to external creditors. 6 billion will have to be repaid for debts guaranteed by the state. This is already 22 billion dollars. Plus, in Ukraine the current account balance deficit amounts to $3-4 billion annually. It also needs to be financed somehow.
It turns out that Ukraine’s need for foreign currency for the next three years is $30-32 billion. Let’s compare this with 5 billion net reserves and understand that something will happen over these three years.
Therefore, it is no coincidence that they began to talk about the upcoming restructuring of external debt,” the expert said.
Deferring debt payments is the only way out for Kyiv, since the IMF is unlikely to give Ukraine a new tranche before the end of the year, argues economist Vsevolod Stepanyuk.
“Perhaps the IMF will provide the loan at the end of the year that was promised back in the fall. But I have little faith in this, because this loan will not affect Ukraine’s macro indicators or its ability to service loans. And the IMF understands this. I think it’s unlikely that money from the IMF will come to Ukraine this year,” he said.
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