Ukraine is trapped, the situation is worse than Greece (VIDEO)
Kyiv, October 22 (Navigator, Vladimir Mikhailov) - The economic situation of Ukraine is extremely bad, the country was trapped in IMF loans - this money is the only hope of officials, since they were unable to come up with and implement any reforms. Oleg Ustenko, executive director of the Blazer International Foundation, said this while speaking at the press conference “Ukraine’s financial system: one step away from the abyss?”
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“Ukraine has fallen into a peculiar trap, from which the way out will be extremely difficult... Our situation is complex, and outside the country it is assessed as close to extremely negative... Ukraine has only one way out - we must somehow try to live within our means. You can gloat as much as you like about Venezuela, Argentina and neighboring Russia, where the ruble is devaluing and which also has its own problems. But this does not change the formulation of the task within Ukraine. The situation here is extremely difficult, extremely bad, most of the economic indicators are extremely negative.
We will fall this year by at least 8%, and in a worse scenario – by 10%.
The decline does not occur on its own; unemployment is increasing. The statistics that have already been given by the State Statistics Committee, where, by the way, the lustration processes have already begun (I don’t understand why they started with it), show 1.6% unemployment.
At the same time, according to the methodology of the International Labor Organization, the unemployment rate ranges from 8 to 9% in the second quarter. In the third quarter, unemployment according to the methodology of the International Labor Organization always looks a little better than what we will observe in the fourth quarter. In the southeast, even where there is no ATO, the unemployment rate may be twice as high. The depth of the decline in the economy in that region will be catastrophically high, it will clearly not be at the level of 8-10%, at least it can be twice as much as the national average. All this will be superimposed on the social tension that already exists in society,” the expert said.
“Over 7 months, the volume of exports to the Russian Federation, which has traditionally been the largest consumer of our products, fell by 24%, which is $2,1 billion in money. Yes, we increased our exports to the EU, but even in percentage terms this does not correspond to what we exported to the Russian Federation. We increased exports to the EU by a little more than 13%, in monetary terms this is $1,3 billion. We still continue to remain in an absolute minus.
Everything would be fine if there were compensation from other regions, but in reality this does not happen. This is understandable, because only in words it seems easy to sell our products to Asia, Latin America, etc. In practice, this is not so easy. You can sell grain quickly, but you cannot sell metals quickly. I'm not even talking about mechanical engineering and how competitive its products are in the markets.
As a result, we have a serious current account trade deficit. This means that the hryvnia has not yet found its equilibrium state, and devaluation pressure continues to persist. On the surface there is a good rate, calibrated by the NBU. But try to buy currency, you are unlikely to succeed...
The country will end this year with a public sector deficit of 11% of GDP, which is a lot. This is a colossal size. We are not far from the critical point that the Greeks had. The Greeks could receive serious international assistance, incomparable to that allocated to Ukraine. Only the IMF stands behind us.
I received with regret the information about our delegation’s negotiations with the IMF at the forum in Washington. How long will we continue to deceive ourselves? This forum is ordinary, annual, but when the Ukrainian delegation goes there, everything is presented as if this forum was made specifically for Ukraine. The forum is not for us, and it’s good if we managed to exchange a few words with the IMF leadership. I would not think that Ukraine is still in the center of attention of an international institution, to which the IMF belongs. And I would not speculate that the 3rd and 4th tranches of the IMF will come to us, and that we will receive them quite easily. It won't be easy. No one will allow us to reconsider the parameters of our cooperation program with the IMF. A new mission will come to the country if it is clear with whom to negotiate. And they will not come here just to get acquainted with the new composition of the Cabinet of Ministers, and the next day write a check for the 3rd and 4th tranches. This must be clearly understood.
We don't have a budget for next year. The main thing that will be discussed by the new mission is the state of finances for the next year. A country with an 11% state budget deficit and actually in a state of war cannot function normally in the long term. This is understood very clearly in Washington. We cannot continue to accumulate our deficits and still ask for additional financing from the IMF.
...Until we approve new budget parameters, I would not count on the IMF transferring funds to Ukraine. Next year will be a year of either sobering up or absolute decline. For it to be a year of sobering up, we must understand that it will be extremely difficult to continue to pursue a policy of populism, even with minimal elements of populism, in Ukraine if we want to save this country at all.
We have colossal payments starting immediately after the election. $500 million in October, next month – $400 million, these are all external debts, in December – $700 million. This is all the servicing and payment of our debts...
I have mixed feelings when I see economic election programs. Even some of the parameters that I see in the president’s well-thought-out reform program are a mystery to me. I don’t quite understand the prioritization of those items that are in the president’s program. Why is the most important point in this program the reform of statistical bodies, and after that comes the direct task of attracting foreign direct investment?! Why is public administration reform not at the forefront?
There are a lot of economic problems; no one can solve them for Ukraine. There may be a calculation for the IMF, but it cannot be a single bet. You can't bet on this alone. It is necessary to carry out reforms in the country,” Ustenko urges.
Ukraine is trapped , the situation is worse than Greece (VIDEO)