Falling GDP makes Ukraine's default in 2015 almost inevitable, expert

Kyiv, January 15 (PolitNavigator, Vladimir Mikhailov) – The real decline in Ukraine’s GDP last year was 27%. Foreign currency debt increased by the same amount. All this makes Ukraine’s default inevitable unless there is additional help from the EU and the US, says economist Vsevolod Stepanyuk.

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“Currently, Ukraine’s external debt somewhere amounts to more than half of the total public debt. At the same time, according to my calculations, this is easy to calculate from the statistics of the State Statistics Committee and from the dynamics of the exchange rate; in currency terms, Ukraine’s GDP decreased by 27%. Accordingly, public debt increased by 27%. It is not clear how the State Statistics Committee calculates the national debt. They write data without Crimea and without occupied territories. Crimea is another minus 3% of GDP, and the occupied territories are another minus 10%. In total, even according to the State Statistics Committee, GDP in Ukraine, let’s say, in actual terms, decreased by 21%,” the expert said at a press conference in Kyiv.

Tax reform and deteriorating relations with Russia worsen the picture.

“The tax reform, which was carried out before the adoption of the budget, not only does not stimulate the economy, it destroys it, depresses it and does not allow it to develop at all. Because of it, a number of export industries are deprived of government support. In addition, the government has done everything to further reduce the consumption market in Ukraine. Well, plus, of course, relations with Russia, relations with the CIS, they also do not add optimism to the development of industry.

Therefore, the fact that the IMF has arrived and will work for a long time, I think they will simply draw up some new version of the budget, which will be considered in February, and revise any positions. But again, the stand-by program does not save Ukraine from default this year. If the main donors in the form of the EU and the US do not help, then a default this year is more than obvious,” the expert warns.