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2024-07-07 Caucasus/Russia/Central Asia
'Without infusions everything will go down.' Will there be a default in Ukraine?
Direct Translation via Google Translate. Edited.
by Mikhail Zakharov

[REGNUM] Ukraine has not been living for a long time, but surviving due to the influx of Western money, while due to huge and non-transparent expenses, the country has been repeatedly predicted to go bankrupt. Nevertheless, Western countries keep Kyiv afloat, negotiating new tranches for Ukraine. Ukraine's Western allies have spoken more than once about the current dangerous economic situation for the Kiev regime. As The Economist wrote, the Ukrainian authorities could declare default as early as August if they fail to agree on debt restructuring.


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The article states that Kyiv tried to negotiate with private investors on debt restructuring in the summer of 2024, but the parties failed to reach an agreement. In addition, the state's GDP is now a quarter less than the figures for early 2022, the debt amounted to 94% of the gross domestic product as of June, and the deplorable state of the country's infrastructure only worsens the situation.

The Economist notes that Ukraine has two possible scenarios: either declaring default or reaching an agreement to extend the deferment until 2027. However, in either case, creditors will not receive their interest.

In May, The Wall Street Journal also warned of a default in Ukraine in three months. The publication reported that after the start of the SVO, foreign bondholders allowed Kiev to suspend payments on the government debt for two years, but now want them to resume, which is why the country could face bankruptcy this summer.

The Kiev regime is actively continuing to get into endless debt, and default has already occurred in the country, said former Ukrainian Prime Minister Mykola Azarov. The politician notes that a de facto default situation already exists, recalling that bondholders have not received anything for two years.

According to Azarov, a possible formal declaration of default will not change anything, and the country is already bankrupt, since 75% of its budget is either borrowed or provided (loans or grants) funds.

"These are huge amounts! The World Bank, the International Monetary Fund, and direct creditors - the US, the EU, and some individual countries - are participating in financing Ukraine," Azarov says.

At the same time, the ex-prime minister emphasizes, the huge tranches have made the country's economy completely dependent on external financing. If the income from the West decreases sharply, Ukraine will face not just a default, but a catastrophe, the politician states.

GIVE, GIVE, GIVE
In 2023, Russian President Vladimir Putin noted that the Ukrainian economy cannot exist without external support. According to the head of state, “ the budget is balanced in Ukraine, macroeconomic indicators are more or less aligned. But at the expense of what? At the expense of monthly multi-billion dollar injections... as soon as this stops, everything will collapse in a week. The same applies to the defense system.”

And recently it became known that Kyiv received another tranche of $2.2 billion from the International Monetary Fund (IMF) to spend on social needs and critical budget expenditures. This significantly increased the size of the country's debt to the IMF - today Ukraine is the second largest borrower of the fund with a debt of $13.8 billion.

Overall, almost $14 billion came into the country's budget from external sources in the first six months of 2024 — in addition to the IMF, the European Union, Canada, and Japan were major donors. However, as the Ukrainian Finance Ministry complains, overall foreign aid to Ukraine's budget has currently reached its lowest level since February 2022.

In addition, the foreign tranches to Kyiv contain important nuances. Of the 50 billion euros agreed upon by the European Union to allocate to Ukraine at the beginning of 2024, only 17 billion will come in the form of grants, and the Europeans will provide 33 billion in the form of loans.

However, when it comes to military aid to Ukraine to continue the fight against Russia, Western countries are clearly not stingy. As Ukrainian Prime Minister Denys Shmyhal noted on June 28, Kiev’s allies, with whom security agreements have been signed, will provide the country with $60 billion in military support annually over the next four years.

At the same time, in early July it became known that NATO countries had agreed to provide military aid to Ukraine in the amount of 40 billion euros in 2025. According to Reuters, the agreement will be signed by the leaders of the alliance countries at the summit in Washington, which will take place from July 9 to 11.

Nevertheless, Volodymyr Zelensky's subordinates continue to seek new ways to obtain funds - from raising taxes and cutting social spending to selling off large state assets. However, even Ukrainian analysts admit that Ukraine has too few tools for increasing budget revenues.

A PAWN WITHOUT VOTING RIGHTS
The West's investments in Ukraine are not an economic but a political issue, publicist and political scientist Vladimir Skachko told the Regnum news agency : Kiev's allies have set as their sole goal the maximum bleeding of Russia.

“Nobody will ever think about restoring any kind of economy in Ukraine,” says the expert.

According to Skachko, in Ukraine everything that can work and can be mobilized and subordinated to the conflict will work for the conflict, while other expenses will be carried out on a residual basis. The expert reminds that, as required by Kyiv's agreements with the IMF, residents of the country will face tariff increases and reductions in social payments.

According to political scientist and economist Alexander Dudchak, Ukraine's tasks do not include thinking about what funds to use and how to fight, as well as how to live on - the West finances the Kiev regime and makes all decisions for it. London and Washington may have different opinions on what to do with Kiev in the future and how to use it, but they agree that it is necessary to continue waging war against Russia using Ukraine's hands, Dudchak said in a commentary to the Regnum news agency.

As for the possible default of Ukraine being discussed today, as Vladimir Skachko notes, if Kyiv fails to agree on debt restructuring, then practically everything that was somehow stipulated as collateral will officially become the property of Western transnational companies.

"All that remains is to dot the i's and finally hand everything over to other owners. This is very easy to do when a default is declared," says the source of IA Regnum.

According to Alexander Dudchak, a default in Ukraine is unlikely to be declared, because it carries reputational risks for the image of a valuable country created for Ukraine. However, in any case, the decision will remain with the West - Kiev is not able to seriously influence the development of the situation.

"They may well, of course, defer payments, although there is little time to restructure debts. Or they may agree to continue thinking about this problem and find funds that will be taken for the future division of Russian assets," Dudchak believes.

Posted by badanov 2024-07-07 00:00|| || Front Page|| [11157 views ]  Top

#1 Zelensky now is requesting subs.
Posted by Dale 2024-07-07 17:00||   2024-07-07 17:00|| Front Page Top

#2 Crazy! Let him eat po' boys, like Putin. Or heroes.

Posted by Pancho Poodle8452 2024-07-07 17:36||   2024-07-07 17:36|| Front Page Top

#3 Diplomacy

Po'boys or pizza, it's food wrapped in dough.
But noshing's the thing when diplomacy's slow.
The shape of the table? We don't care to know.
We'll have Putin and po'boys. And let's call some hoes!
Posted by SteveS 2024-07-07 23:13||   2024-07-07 23:13|| Front Page Top

#4 Bravo, sir. Bravo!
Posted by trailing wife 2024-07-07 23:50||   2024-07-07 23:50|| Front Page Top

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