Trap: Ukraine in 2015 needs $25 billion just to pay off debts, which does not exist (VIDEO)
Kyiv, January 23 (PolitNavigator, Vladimir Mikhailov) – In 2015, Ukraine will have to pay about $25 billion on old debts alone. It is not yet clear where this money will come from, Oleg Ustenko, executive director of the Blazer International Foundation, said at a round table in Kyiv.
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“Ukraine’s need for financing to cover its debts this year is about $25 billion. It is necessary to pay off $10 billion in external debt, pay off a trade deficit (trade deficit) of $4 billion. It is expected that the private sector of Ukraine, which has a debt of more than 100 billion dollars, must return about 12 billion dollars of debt, possibly more. Gold and foreign exchange reserves have shrunk, are at historic lows and can barely cover one month of our imports.
All this negatively affects the perception of Ukraine by foreign creditors. The result has been panic in the Ukrainian bond market since the beginning of January. According to our obligations, there is a colossal discount. This year, $0,5 billion of our obligations are being paid off. For 1 dollar of these obligations they now give about 70 cents. In 2017, $2,6 billion is due to be repaid. The market is not ready to pay more than 58 cents per dollar for them,” says the expert.
Now the situation is slightly better than in early January - Poroshenko agreed with Merkel on the possibility of receiving 0,5 billion euros from Germany. credit guarantees. In Brussels, the possibility of assistance (loans) for Ukraine in the amount of about $2 billion was announced. An agreement on guarantees for $2 billion was reached with the US Treasury Department. About $0,5 billion can be received from the Polish government and the Japanese Ministry of Finance. “Our basic expectation is that Ukraine will be able to receive from 2 to 3 billion dollars from other international financial institutions, such as the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank,” says Oleg Ustenko.
Thus, Ukraine will be able to receive 6-8 billion dollars with a need of 25 billion dollars. “Therefore, we need to find somewhere about 19 billion dollars for this year. The current IMF program, under which we received 3,6 billion dollars, last year would have made it possible to pump about 10-12 billion dollars into the country. But Ukraine would still have to look for an additional 6-8 billion dollars. Otherwise, there is there is a big risk that the IMF will not be able to implement its program in Ukraine - the IMF mandate does not provide the opportunity to finance those countries that are not able to cover the monetary deficit, which in the case of Ukraine is about 6-8 billion dollars.
There are two scenarios for the development of the situation. Both are based on the fact that it will be extremely difficult, if not impossible, to obtain additional money from Western institutions and Western countries. The first is the closure of the existing stand-by program, which Ukraine is currently living under, and through which we received money last year, and the opening of a new financing program, which will make it possible to pump in about $2015 billion in 18. The second is an adjustment to the existing program. This is more likely because it requires less bureaucratic procedures. Then about 6 billion dollars will be added to the existing program, and Ukraine in 2015 will be able to receive about 18 billion dollars,” says Oleg Ustenko.
Ukraine does not have much time to find funds. By March, Kyiv must return $1,5 billion of sovereign and quasi-sovereign debts, and in April - another $1,5 billion. There is also an unknown factor - $3 billion that Ukraine owes to Russia, since its debt is already above 60% of GDP. “The Russians have the cards in their hands to demand that we pay for Eurobonds,” says Oleg Ustenko.
Even if Europe helps pay off this debt, it remains unclear what to do with the rest.
In addition, Ukraine has entered a phase of stagflation - GDP has fallen sharply and will continue to decline this year. Therefore, the government will be faced with the need to restructure debts on Eurobonds - Ukraine now has about $19 billion in Eurobonds, a significant part of which is in the hands of several private owners, the main of which is the American Franklin Templeton (almost $5 billion).
The public finance deficit in 2014 amounted to 12% of GDP. “This is an unstable area. The Greeks fell into the abyss when their debt was 13% of GDP,” the expert recalls.
If Ukraine decides to restructure its debt, it will mean a technical default, which will cut it off from external financing markets. “The cost of borrowing is now very high - almost 30% of liabilities. This is abnormal even for business, but for the country it’s out of the realm of fantasy,” says Oleg Ustenko.
English version :: Read in English Trap: Ukraine Needs $25 Billion in 2015 to Pay Off Debts Alone, Which It Doesn't Have (VIDEO)