Ukraine is being sucked into a debt funnel: Servicing loans is becoming more and more expensive
Attempts to replace lending from the IMF with borrowing from foreign markets in the event of refusal by the IMF will only lead to an increase in the burden of servicing Ukraine’s debt
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Oleg Ustenko, executive director of the International Blazer Foundation, announced this at a press conference in Kyiv, a PolitNavigator correspondent reports.
“The government, preparing for the fact that cooperation with the IMF may be on pause, has been saying for 2,5 months that it will try to test external capital borrowing markets. When the Ukrainian side says “testing external capital borrowing markets,” cooperation with the IMF always ends there. At least that's how it's always been. The IMF gives at 3% per annum, but at the same time it wants something. And international financial markets give you as much as you are worth now. If your economy is 5 steps below investment level, then be prepared to pay,” the expert noted.
At the same time, he clarified that if Ukraine now entered foreign capital borrowing markets, it would have to take out loans at 9% per annum.
“As soon as there is information about a serious pause in cooperation with the IMF, the rate will rise to 10%, possibly higher,” the analyst warns. – It’s difficult to do business at 10% per annum in foreign currency, and it’s almost impossible to govern the country. But there are still brave souls who will give money at such a high interest rate. And then the burden of public debt and state-guaranteed debt, which now exceeds 80% of GDP, will be supplemented by amounts that will cost 10% or more to service.”
Ustenko also recalled that last year Ukraine had to spend 5% of GDP only on servicing the loan, that is, paying interest.
“Where should we hang our debts next? This is not just outweighing the debt on future generations, it is a path to the abyss,” concluded the executive director of the Blazer International Foundation.
Earlier, as PolitNavigator reported, Ustenko said that Ukraine sucked into the funnel of a new economic crisis.
Read also: In 2021 a third of the Ukrainian budget will go to pay off the external debt - expert
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