The total public debt of Ukraine has exceeded 74 billion dollars. Every year the budget has allocated tens of billions of hryvnia loan servicing and separately to redeem them. Debts have to repay with interest. This year alone, 31% of the entire expenditure side of the budget “eaten” loans. But the most difficult times, analysts say, is yet to come. In two years Ukraine will have to repay $ 11 billion of foreign loans. The website “Today” figured out how should Ukraine and how quickly it will be able to repay debts.
“Reform is necessary as air”
“We are 4% of GDP spending to service external debt, it is more 100 billion annually,” – said the other day, Prime Minister Vladimir Groisman. According to the Ministry of Finance, the loan servicing this year will take 111,3 billion, and the repayment of the principal amount – 129,6 billion. The government is confident: the only way to get out of debt is to reform. For example, only due to pension reform, you can save about 140 billion hryvnia per year. It is so much spending from the budget to cover the deficit of the Pension Fund. Pension reform, believes Vladimir Groisman, will allow for seven to ten years to completely eliminate the “hole”.
“The reforms we need as air. Everyone who says they don’t need need all all to pay today, – I also support it. But those who say they do understand that in the budget there is no money, and how to do it, they do not know. This nonsense we sometimes take for granted,” said the Prime Minister.
“The reforms we need as air. Everyone who says they don’t need need all all to pay today, – I also support it. But those who say they do understand that in the budget there is no money, and how to do it, they do not know. This nonsense we sometimes take for granted,” said the Prime Minister.
The Director of the analytical Department of Concorde Capital Oleksandr Parashchiy also believes that the only way out of this situation is to reform the economy. “Not just to tick the box, and really reform the economy. If we do not reform, the very difficult will be 2019,” – said the expert. For evaluation Parasia, Ukraine will be able to repay these loans, but need the confidence of creditors and investors that the borrowing country 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.
With a total debt of $ 74 billion of the International reserves of Ukraine amounted to only 18 billion. “That is all international reserves are not even enough to pay off a quarter of the total debt. How to live without loans are in such debt and such low reserves is a complex issue,” – said the Deputy Director of analytical Department “Alpari” Natalia Milchakova. If the total public debt is divided for every Ukrainian, it will turn around at 1760 dollars.
Repayment of loans is planned, including due to external borrowing, the analyst 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.
One of the main problems which must be overcome by Ukraine, said the Executive Director of the international Fund blazer Oleg Ustenko – poor conditions for doing business. “Poor business climate leads to high informal sector. Also the country has not come investors “, – says the expert.
What with the IMF: why the delayed loan tranche of what will happen next
Loans provide the international Monetary Fund (IMF), the world Bank, the European Union, the European Bank for reconstruction and development, USA, etc. The cooperation with the IMF gives a green light, for example, for macroeconomic assistance from the EU. The next tranche of Ukraine was supposed to receive in June and July of this year. The main conditions for receiving the money – the adoption by Parliament of the pension and land reforms. First adopted in the first reading and the second was moved to fall. With this to fall and delayed the next loan.
By the way, the news about the freezing tranche had an impact on the dollar, said the analyst of “Alpari” Maxim Parkhomenko. However, because of the activity of exporters and a new crop of national currency is practically not displayed.
In the framework of land reform, Ukraine has committed itself to develop a bill that will allow selling of agricultural land and to remove the moratorium on the sale of land at the end of this year. “We also run an awareness campaign for the public to explain the benefits of this reform”, – stated in the Memorandum.
In addition, according to the Memorandum, Ukraine needs this summer to revise the remuneration system in the public sector to reduce. No cost and no layoffs. “We will begin the medium-term programme for the reduction of employment in the public sector. Plan to reduce the number of employees in the public sector (excluding military) by at least 4% by the end of 2017, and another 10% by the end of 2019”, – stated in the document.
In the public sector to implement the Memorandum should gradually monetize (pay money) subsidies, and to introduce the so-called “subscription fee” on gas and heating.
We will remind, on April, the IMF approved the allocation of Ukraine the fourth tranche of the extended Fund in the amount of one billion dollars. Money started to arrive at the NBU fifth of April. The entire program provided Ukraine about $ 17 billion, of which Kiev has already received us $ 8.7 billion.
