Life in credit: Ukrainian consequences of new borrowings

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On August 24, the Ministry of Finance announced that $ 725 million was lent via private placement, which will have to return in February 2019. The placement agent was the well-known company Goldmann Sachs International.
This step should be regarded as the need to wait for the tranche of the IMF (if the commission arrives in early autumn, the money will appear at least in October). In September payments on foreign debts are planned. External creditors are no longer ready to wait. Also, money from a private loan will go to finance the state budget and pay off domestic debts.
Here, the room for maneuver was really small. Fairly clear warnings came to Ukraine. "Ukraine must pay its debt obligations, otherwise it will lose the opportunity to attract new loans in foreign markets," - said in early February Vice President of the World Bank Cyril Muller. It was said unequivocally.
By the way, the servicing of the national debt is 130 billion UAH annually (the size of the national debt is almost 60% of GDP). This is less than the cost of education (221.9 billion UAH), but more than the budget of the Ministry of Defense (83.3 billion UAH). Even the likely implementation of the Government's ambitious plans to reduce the national debt in two years (by 2020) to 49% leaves the costs at a fairly serious level.
Globally in the modern world, debts are not such a terrible thing. But there is one thing: to be a country with debt is much easier, when the funds go for development, the economy grows and there is a reputation of a good debtor. The funds that have been massively engaged since Yushchenko's time have disappeared. And they need to be returned.
The economic dimension of the agreement is understandable. Ukraine lends for a short period of time. The funds provide an opportunity to show that we are able to pay and are ready to service the debt. Do not touch the hryvnia funds from the Single Treasury account, because this can affect the course. Also, Ukraine wins time for agreements with the IMF, the EU and the World Bank.
At the same time, it should be understood: Kyiv does not have the right to fail the terms for repaying the debt on private placements. The issue of developing the Ukrainian economy is also acute. Otherwise, there is a threat that the new funds will simply go to pay off urgent payments. And the gap will be bigger
To what it can lead politically[/img]

The Ukrainian authorities need to maintain a clear balance between working with partners (Western financial institutions with clear requirements and terms of repayment of loans) and removing Ukraine from the possibility of external management.
And it is possible. Provided that public funds go to development, and not be included in cozy off-shores of corrupt politicians.
Otherwise, you just have to change politicians in power. A chance for this will be in next year.
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