That's all: Ukraine can no longer live without IMF loans
Ukraine can no longer live without IMF loans; Kyiv needs to receive 10 billion dollars next year, which there is nowhere else to get. Oleg Ustenko, executive director of the International Blazer Foundation in Ukraine, spoke about this at a press conference.
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“We forecast Ukraine’s need for foreign currency for the next year at the level of $10 billion. It is impossible to cover it with internal sources. Therefore, it is very important for Ukraine to continue cooperation with the IMF,” he said.
Ustenko explained that in the first half of 2017, new loans taken abroad will be the only way for the Ukrainian leadership to close the “holes” in the budget. In response, creditors will demand more and more “unpopular” measures from Kyiv. If Ukraine tries to ignore the demands, the money will have to be taken at an even higher interest rate.
“At least for the first half of 2017, they may be the only source of serious foreign currency inflow into the country. Otherwise, it will simply not be possible to maintain all the macroeconomic parameters included in the budget. I believe that there will be serious risks of budget monetization when fiat money is simply printed and sent to cover the deficit.
Another risk. As the experience of the latest economic history of Ukraine shows, when it is difficult to fulfill certain requirements, Ukraine begins to play its old strategy - it promises one thing, but does something completely different. For example, the demands that the country of Ukraine undertakes at some point seem politically impossible to implement, and after that the country runs out to foreign capital borrowing markets and, come what may, tries to borrow there at any interest rate.
For example, under the Tymoshenko government in 2008-2009, when there was a crisis and a serious state budget deficit, the first IMF tranches were received normally, then there was a temporary pause in our cooperation with the IMF, and after that, despite the fact that borrowings from the IMF were at 3 % per annum, slammed the door, ran out to foreign capital borrowing markets and, “it was not there,” they lent at more than 6% per annum,” Ustenko recalled.
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