For every Ukrainian has tens of thousands of hryvnias of the state duty. The total debt of Ukraine – almost 71 billion dollars. Experts are sure that without the next tranche from the IMF, the economy of Ukraine is waiting for a strong shock. At the same time, the debt burden on the country grows in 2019 will have to return about six billion dollars. For comparison, the credit tranche, which Ukraine expected at the moment – about a billion dollars. The website “Segodnia” found out why Ukraine takes the credit and where it can lead.
Does Ukraine threatens to default
Experts say the threat of Ukraine to 2019, to this point, says analyst “Alpari” Anton Kozyura, state enterprises, the national Bank and the Ministry of Finance will have to pay the foreign debts of about $ 14 billion. But a large part of this sum – about six billion – accounted for by 2019, says the head of analytical Department of Concorde Capital Oleksandr Parashchiy.
In this regard, in 2019-2020, if the economy does not accelerate the rate of growth, Ukraine threatens to default, I’m sure para. “We got two and a half years to carry out reforms. Not just to tick the box, and really reform the economy. If we do not reform, the very difficult will be 2019. In principle, we will be able to repay these debts, but we need the confidence of creditors, investors, money that we borrow, we will return. More importantly – the level of debt in relation to GDP. Now it has reached about 80% if the economy will grow at the same rate as now, in 2019 it will mean a default,” – said the expert.
“In principle, we will be able to repay these debts, but we need the confidence of creditors, investors, money that we borrow, we will return. More importantly – the level of debt in relation to GDP. Now it has reached about 80% if the economy will grow at the same rate as now, in 2019 it will mean a default,” – said the expert.
According to Alexander Parade, the IMF predicts GDP growth of 10% a year (this year, the NBU envisages a growth rate of 2.8%). “The IMF forecasts economic growth of Ukraine (10% of GDP per year – ed.) until it looks too optimistic – especially in terms of GDP growth in dollar terms. Most likely, this increase of the IMF lays the effect of reforms”, – said Oleksandr Parashchiy.
Repayment of loans is planned, including due to external borrowing, said Anton Kozyura. If Ukraine will continue cooperation with international creditors, the default situation the country faces. “In view of the fact that to repay offered by new borrowing, it is possible to draw the conclusion that Ukraine is not threatened with bankruptcy as long as it gets the support and credit lines from institutional investors”, – said Kozyura.
Whether tranche from the IMF
Tranche from the International Foundation depends on support from other international creditors. In fact, the loan the IMF gives a green light for other lenders. To obtain funds, Ukraine is expected to sign a Memorandum on cooperation, which will take on certain obligations. As recently stated by the Minister sotspolitiki Andrey Reva, one of the key recommendations, implementation of which the IMF insists raising the retirement age for the Ukrainians. It is recommended to do in order to reduce the deficit of the Pension Fund. At the end of this year the Pension Fund deficit will reach 141 billion UAH, last year – about 145 billion hryvnia.
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If the Ukrainian government does not agree with the IMF or otherwise, to enter foreign markets for loans and borrow at high interest rates, says the Executive Director of the International Fund blazer Oleg Ustenko. Some time without the loans Ukraine will be able to use the money of gold and foreign exchange reserve. Thus, according to Ustenko, in the gold and foreign exchange reserves is 15.5 billion dollars, 4 billion of them – a pure reserve, and the rest of the IMF money.
At the moment the main obstacle which does not allow to negotiate the Memorandum with Ukraine, IMF, land and pension reform. So, experts suggest to open the land market and, as the Minister said Reva, raise the retirement age. If the Memorandum is agreed upon, Ukraine will receive credit within a few months. “We are in close contact on the remaining issues and concludes with a discussion of the Memorandum on cooperation. The completion of the third review and the meeting of the Board of Directors of the IMF will in the next few weeks. The exact date can not say”, – said the press-Secretary of Department of external relations of the Fund, William Murray.
The amount of the expected tranche – about a billion dollars. The money will go into gold and foreign currency reserves of the National Bank.
How should Ukraine
At the moment, Ukraine’s state debt made up of 82.6%. According to the Finance Ministry, Ukraine needs $ 71 billion, or 1.9 trillion hryvnia. Last year, the public debt rose by 8.3%, or by 5.47 billion.
“During January-December 2016 the sum of public and publicly guaranteed debt increased by UAH equivalent to 357,58 billion. Thus in dollar terms, public and publicly guaranteed debt increased by 5.47 billion,” – said in statistics published by the Ministry of Finance.
The main reasons for the growth of Ukraine’s debt: capitalization nationalized “Private” (the Bank will cost Ukraine billions of hryvnia 148) and the devaluation of the hryvnia (the rate from the beginning to the end of 2016 “lost” from 24 to 27,19 hryvnia per dollar).
Economists believe that Ukraine’s state debt exceeded the allowable maximum, says Anton Kozyura. “The generally accepted threshold of debt to GDP ratio for developing countries is considered to be the level of 60%, while for developed countries this level can be shifted much higher and even exceed the amount of debt. As for Ukraine, at this stage, this ratio slightly above 80%, which by itself is a very disturbing signal,” – said the expert.
“The generally accepted threshold of debt to GDP ratio for developing countries is considered to be the level of 60%, while for developed countries this level can be shifted much higher and even exceed the amount of debt. As for Ukraine, at this stage, this ratio slightly above 80%,” – said analid.
In the state budget for the current year laid the decline of public debt to the level of 1,720 trillion hryvnia, while the budget deficit is once again to repay external borrowing.