Without help from international financial institutions, Ukraine faces bankruptcy and poverty. This was stated by President Vladimir Zelensky in his article for the Spanish newspaper El Pais. According to him, Kiev needs the support of the IMF and the World Bank, especially against the backdrop of economic problems caused by the coronavirus pandemic.
“I am pleased to see that our international partners: the International Monetary Fund, the World Bank and others, are ready to help implement the reforms that our country urgently needs, as well as provide the financial resources necessary to service the debt. Without this, the specter of bankruptcy looms, which would plunge Ukraine into poverty, ”Zelensky wrote.
As of March 2020, the size of the state and state-guaranteed debt by the Ministry of Finance of Ukraine was estimated at $ 80.38 billion, external borrowing accounted for half of this amount. Peak payments this year will fall in May and September. At the same time, currency payments by the government of Ukraine and the National Bank in 2020-2022. together with interest will exceed $ 24 billion.
In his article, Zelensky warns that if a negative scenario becomes a reality, then restoring the country's economy “would become long and difficult.” For this reason, Kiev hopes for a new financing program to be approved by international lenders.
Credit for reform
Currently, the Ukrainian leadership is awaiting the approval of the IMF three-year program of expanded financing in the amount of $ 5.5 billion. An agreement on this was reached in December last year. However, to date, the board of directors of the fund has not approved a new credit line. Moreover, the exact date of consideration of this issue is still unknown.
On April 27, during an online meeting of the Verkhovna Rada Committee on Finance, the head of the Ukrainian Ministry of Finance, Sergey Marchenko, said that by the end of this year, Kiev expects to receive $ 3.5 billion from the IMF if the management of the fund makes a positive decision on this issue.
Prime Minister of Ukraine Denis Shmygal explains the slowness of the IMF in deciding that the country has not adopted a "banking" bill No. 2571-d, which is called "anti-Kolomoy" in the media. Now the Verkhovna Rada is preparing to consider it in the second reading, although the voting deadline has not yet been determined. The first reading in parliament took place on March 30 this year.
In a recent telephone conversation with French President Emmanuel Macron Zelensky promised that the bill would be adopted.
“The law on banks is a priority for us. I am sure that we will vote for it, because it is important for us and opens up opportunities for cooperation with the IMF, ”the website of the Ukrainian president quoted Zelensky as saying.
Recall that this document will expand the powers of the National Bank of Ukraine (NBU). The regulator is vested with the right to the inevitable liquidation of financial institutions. At the same time, the former owners of the bank actually lose the opportunity to obtain compensation through the court for damage caused by such a measure.
The bill directly affects the interests of the oligarch Igor Kolomoisky. In 2016, the Ukrainian state nationalized its PrivatBank. However, the businessman began to challenge this decision in the district administrative court of Kiev, which in April last year sided with the plaintiff.
Now the trial is ongoing in other instances. According to experts, the IMF management fears that the Ukrainian state will agree to pay compensation to Kolomoisky to the detriment of paying off debts to international lenders.
Against this background, the RT source in the Ministry of Economic Development and Trade of Ukraine notes, the IMF has significantly tightened the requirements for issuing tranches: now Kiev can no longer receive loans under the “promises” to carry out the reforms that the fund insists on. If the “anti-Kolomoisky” bill is not adopted by the Rada, then Ukraine will have to do without new loans.
In an interview with RT, the president of the Center for System Analysis and Forecasting Rostislav Ishchenko noted that at present Western lenders are in no hurry to “help” Kiev, seriously fearing that the money invested will not go back.
“The Fund is pulling with the approval of a new tranche, so that Ukraine, in the wake of the crisis, will adopt laws under its dictation that will guarantee the repayment of debts,” he said.
At the same time, Zelensky constantly emphasizes that the Ukrainian economy will not survive without tranches of the International Monetary Fund. So, on April 17 on the talk show “Freedom of Speech by Savik Shuster” he likened the IMF loans to human blood, without which the body cannot exist.
- Center of Kiev during the pandemic
- globallookpress.com
- © Sergei Chuzavkov / Keystone Press Agency
According to Zelensky, during the period of the coronavirus pandemic and the global economic crisis that began because of it, Ukraine cannot afford to speculate on whether it is profitable for her to take a new loan.
According to Andrei Suzdaltsev, Deputy Dean of the Faculty of World Economy and International Affairs, the President of Ukraine is now trying to achieve leniency from international lenders, appealing, inter alia, to the problems caused by the spread of COVID-19. In this context, an article published on the El Pais website is a kind of reminder for the West and at the same time a “cry for help”.
“Zelensky is trying to exploit the theme of coronavirus and, it seems to me, is hinting that Ukraine, if it does not receive emergency assistance, could turn into an infectious threat for the whole of Europe. Nevertheless, we see that the West is deeply immersed in solving its own problems. In recent years, the topic of Ukraine has generally lost its relevance, ”he stated in an interview with RT.
Bankruptcy prospect
An RT source at the Office of the President of Ukraine claims that an article in El Pais and other public statements Zelensky hopes to influence the decision-making process of the IMF leadership. According to him, the Ukrainian leader makes the fund understand that new loans will go to repay old debts.
“The country does not have money to pay debts to international lenders, business support and social payments. Therefore, the president sends the IMF a clear signal - if you don’t give the money, then Ukraine will turn into bankrupt, and the millions of people who flee to Europe will become illegal migrants. In order to prevent this, money from the fund is needed at the end of May, ”the source said.
According to an interlocutor of RT from the Batkivshchyna party, for the purpose of obtaining a loan Zelensky even deployed "heavy artillery" in the person of Mikheil Saakashvili, who can take the post of deputy prime minister in the cabinet of Shmygal. The ex-governor of the Odessa region and the former president of Georgia will have to convince the IMF leadership of the need for further "financial support" of Kiev.
“Saakashvili must find the money. The news of his possible appointment shocked everyone. Apparently, there were no professionals left in Ukraine if a scandalous ex-governor had to be involved in this matter. I think that the Western partners were extremely surprised by this step, ”said the deputy.
At the same time, the reforms proposed by the IMF and a new loan will not be able to revive the Ukrainian economy, said Suzdaltsev.
“There are no examples in the world of the positive impact of IMF programs on the economies of countries that borrowed money from him. Ukraine is no exception. The mission of the fund is to toss money to Kiev, which allows it to make ends meet and regularly pay interest on loans. In this case, they won’t be allowed to default, but it doesn’t smell like economic development either. This is walking in a circle, ”the expert believes.
Ishchenko adheres to a similar opinion. According to him, Zelensky and his administration are unable to pull Ukraine out of this economic impasse.
“As for bankruptcy, it was already in Ukraine not so long ago - under Yatsenyuk. After all, the debt restructuring announced by him meant bankruptcy. Now Ukraine for the second time in five years has approached this line. But one must understand that Kiev needs more than money to heal: they could be given, but they will eat up these funds anyway, and there will be even more debts. Ukraine again needs a restructuring and a completely different team - a serious team of economic and political managers who could change course and bring this country out of oblivion. But such professionals are not even expected on the horizon, ”the analyst concluded.