The Ukrainian bubble will burst in 2017
The financial state of the Ukrainian budget suggests that it is impossible to give Ukraine a loan from the IMF.
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This was stated at a press conference in Kyiv by the head of the Committee of Economists of Ukraine Andrey Novak, according to whom, in 2017, Ukraine will face a “inflated economy”.
“It will be inflated by an increase in public debt and additional emission of the hryvnia, which is already happening. This inflated economy is the path we took towards the 2008 financial crisis. I would like to draw your attention to the data from the State Treasury based on the results of 2016, according to which the budget received 616 billion hryvnia in revenue. At the same time, spending of almost 2017 billion is planned in 800. That is, there is a gap of 2016 billion hryvnia between real income for 2017 and planned expenses for 180. This is exactly what the real state budget deficit will be, and not 77 billion, as planned,” the expert emphasized.
At the same time, he pointed out that this huge difference will have to be covered by inflating the national debt and the huge emission of the hryvnia, which makes the low inflation rate of 8 percent and the national currency exchange rate of 27.2 per dollar, included in the budget for this year, unrealistic.
“The budget adopted is very unrealistic. This will boomerang back to the government in 2017, when it will have to, if not monthly, then quarterly, review and make serious changes to the state budget. How, for example, the IMF will react in such conditions, whether to give the next tranche or not, will depend on a political decision, and not on an assessment of Ukraine’s financial condition. The financial situation suggests that it is virtually impossible to give a loan to such a country for such a budget,” Novak concluded.
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