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All of Ukraine’s governments borrowed money; most of all, the current government did

Author : Vitaliy Zhuravsky

Source : 112 Ukraine

Ukrainian debt today is 87% in relation to GDP
14:00, 16 January 2019

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International Monetary Fund decided to allocate two tranches of $ 2.6 billion to Ukraine: May 15 and November 15. Will the new president give up this if the Ukrainians elect the one who promised to cease relations with the IMF? And how will the state give back those borrowings taken earlier?

Related: Moody's raises Ukraine’s sovereign rating, still assessing debt as risky

Ukrainian debt today in relation to GDP is 87%. To be frank, this is a serious threat to our independence and state sovereignty. The current government is a giant with clay feet and “financial crutches” from the international lenders. If you take the crutches away, the entire construction will instantly collapse. The loss of independence of any country begins with the limit when its national debt in relation to the gross domestic product crosses the mark of 60%.

It is necessary to return $ 25.5 billion to the creditors until 2022. And this year, almost 40% of the budget revenue should be paid back as debts.

Related: Ukraine's Naftogaz counts Gazprom's $9 million of overpayment as gas transit debt

Prime Minister Volodymyr Groisman said that this is due to the borrowings, taken by their “political predecessors.” Figures of increasing external debts in political cycles in billions of dollars indicate a different thing. All the governments borrowed money. But most of all, the current government did. In 2005-2009 they took 8.3 billion; in 2010-2013 - 10.9 billion; and in 2014-2018 - 15.8 billion.

Kyiv takes new debts to return the old ones. Before the declaration of martial law, it cost from 7 to 9% per annum. World practice shows that at the end of martial law or war, serious private investors do not come for such countries for at least 2 years after the martial law or war.

In Ukraine, political tension, associated with the election campaigns, is constantly growing. This means that the cost of loans will only grow.

Related: Ukraine to spend one third of budget to repay debts, - Prime Minister

The question is where would Ukraine take money to repay its debts?

World Bank analysts believe that every year the country loses from 13-15 billion dollars due to corruption. According to the IMF, more than 48 billion dollars are used in the underground economy. So everything depends on the authorities. These funds are enough to not only pay off the credits but also raise pensions and wages to our compatriots.

Nevertheless, people chose power. Would they be able to make the right decision?

Read the original text at 112.ua.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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