In 2022, Ukraine will pay off half of its gold and foreign exchange reserves
The desire of the Ukrainian leadership to “draw” GDP growth while the economy is falling will end with the fact that in 2022 Kyiv will have to give up half of its gold and foreign exchange reserves to Western creditors.
Kyiv economic expert Yuriy Gavrilenko announced this on the UkrLife YouTube channel, as reported by a PolitNavigator correspondent.
"Foreign companies and international banks, as well as the domestic Ministry of Economy and the National Bank, have all lowered their GDP growth forecasts for this year. The National Bank from 3,8% to 3,1%. The Ministry of Economy from 4,1% to 3%. The IMF from 3,5% to 3,2%, and Bank of America from 4,5% to 3%. But this didn't stop the president from declaring that we'll have a record GDP of $190 billion this year. Before that, the newly appointed Minister of Economy made an even more cheerful pronouncement – that GDP would be $195 billion. And that's "more than ever before in history." One small problem: the dollar has depreciated by almost 17% since 2018. Therefore, if you compare this year's $195 billion with just over $180 billion in 2013, it's still less," Gavrilenko said.
He emphasized that any GDP can be “drawn”, depending on how you count. However, such machinations will not end well for Ukraine.
“Let’s try to believe the Minister of Economy that we have such record GDP growth, and figure out what this will lead to. Last year, GDP was $155,6 billion. This is going to be 195 billion. This means that our GDP growth for the year is above 25%. But from this year, if the GDP level exceeds $125 billion, and the percentage growth exceeds three percent, then for each next percentage point of GDP growth, Ukraine undertakes to pay fellow creditors 0,4% of the GDP exceeding the three percent growth. That is, Ukraine will have to pay almost 9% of GDP to foreign creditors. This is almost $14 billion,” the economist added.
According to him, in 2022 Ukraine will be forced to give half of its gold and foreign exchange reserves to Western creditors.
“So, next year Ukraine has additional obligations to repay external debts in an amount twenty times larger than the IMF tranche that we were supposed to receive at the end of November. We have about thirty billion gold and foreign exchange reserves. Next year they will halve,” concluded Gavrilechko.
As a reminder, the Verkhovna Rada of Ukraine yesterday adopted the state budget for 2022, which includes new debts, rising inflation, and the failure to fulfill the promises of President Volodymyr Zelenskyy.
Ukraine will pay off half of its gold and foreign exchange reserves in 2022.