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Friday 28 February 2014

Kiev has no money to pay off debts, financial crisis to follow - Ukraine's ex-minister

Ukraine’s new government is saying that it would try to do its best to stabilize the situation in the country. We have got in touch with Victor Suslov, once Ukraine’s Minister of Economy and now Ukraine’s representative in the Eurasian Economic Commission.
Ukraine’s new Prime Minister Arseny Yatsenyuk says that now, Ukrainians would have to toughly economize for some time. Meanwhile, the head of Ukraine’s National Bank Stepan Kubiv has said that Ukraine has enough money to pay back its foreign debts.

News has also appeared that European creditors have agreed to help Ukraine with money for it to restore its gas transport system. What is the real financial situation in Ukraine?

I don’t think that Ukraine really has money to pay back its foreign debts. Today, Ukraine’s National Bank ordered the country’s banks not to give currency deposits to individuals. Yesterday, the rate of Ukraine’s national currency, the grivna, to the dollar reached the point of 11.4 grivnas for 1 dollar, although only a few days ago, it was 8 grivnas for 1 dollar. All these facts are evidence of a serious financial crisis in Ukraine. The US and the EU have promised some financial aid to Ukraine, but in fact a very small one. However, the International Monetary Fund says it may give Ukraine a loan of up to $ 15 bln, but for this, Ukraine should fulfill some demands of the IMF, such as increasing the population’s pay for communal services and the like. At present, there are only from 3 to 4 mln grivnas in the Ukraine’s treasury, which is practically no money. The National Bank has already started emissions of big sums, but this is done for refinancing commercial banks. This will most likely lead to devaluation of the grivna and high inflation.

The new government of Ukraine was formed only yesterday but has already dubbed itself "a government of self-killers" for its unpopular measures. It is expected that this government would exist till the presidential elections, which are due to be held on May 25.

To stabilize the financial situation, the government should, first of all, stabilize the political situation, which is currently very aggravated, especially in the Crimea and some other regions.

Russia’s authorities have not recognized the new Ukrainian government. Russia has already withdrawn its ambassador from Ukraine.

  • Many residents of the Crimean Peninsula want their region to become independent from the rest of Ukraine. Do you think that the new Ukrainian government may agree to that?

  • I find it very unlikely that the new government may allow the residents of Crimea even to hold a referendum on whether their region should get at least a little more autonomy from the rest of Ukraine, to say nothing of a total separation. The government has already clearly said that in several official statements.
 http://voiceofrussia.com/2014_02_28/Kiev-has-no-money-to-pay-off-debts-financial-crisis-to-follow-Ukraines-ex-minister-1999/
28/2/14
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