Ukraine threatens to default, and it expects Russian President Vladimir Putin. In an interview said the former adviser to Putin, economist Andrei Illarionov.
“What is happening now, and it adopted the budget and appointed Cabinet (Arseniy Yatsenyuk – Ed.), unfortunately, do not give great hopes that the new Ukrainian government is able to make changes. The main step that should make Ukrainian authorities – to save the country from default approaching. However, awareness of the burden and the need for it (default – Ed.) to prevent or in Ukrainian society nor the government is not. it is the biggest threat because people just can not imagine how to irreversible security issues, financial, economic, social and political consequences for Ukraine it can bring in a war, “- said the expert.
According to Illarionov, a default Ukraine month left – it is about the end of January and beginning of February.
“In January the volume of international currency reserves Ukraine is likely to amount to little more than seven billion dollars. Then she has to make payments in January. In particular, you will need to pay an advance payment for gas – or gas will not, and the country freeze. When, towards the end of January, will be published statistics on the size of GDP and public debt internal Ukraine. Then it becomes clear that the ratio of debt to GDP exceeds 60%. It is the trigger that Putin uses to request to pay three billion dollars he gave Yanukovych government (after the failure of the then government of European integration – Ed.). Ukraine will have to either give the last reserves, or to default. If it will give the last reserves, the default will be delayed for a few weeks, and if it does not give the money, then the default will be announced before, “- said the economist.
However, the situation, he said, is not hopeless.
“This is a situation that can lead to a deadlock if the Ukrainian authorities do not take the necessary steps now. Over the past ten months, numerous specialists, economists and experts advise, recommend, explained urged the Ukrainian authorities to take the following steps. But Ukrainian authorities failed to do their . what is the probability that these steps will be taken for the months remaining? My answer – low.
A necessary steps are very simple. This absolute reduction of the budget deficit to zero. In fact, its liquidation, which in turn requires a significant reduction in government spending, reform “Naftogaz” which, in particular, provides for raising gas prices; and pension reform, or at least making the first steps towards its reform. None of this is not only done, but is not even discussed, “- said Illarionov.
According to him, Putin expects it to collapse Ukrainian economy.
“Moreover, he repeatedly spoke directly to the waiting time when Ukraine will be in a state of default and stop service its external obligations. This is a situation that not only painful blow to Russia, which is one of the creditors (Ukraine – Ed.), but also to Western creditors. Thus formed a new front for Ukraine – front against their allies. After all, whatever sympathy in Europe and the United States do not regard Ukraine relation to debts and obligations it sacred. Accordingly, there will require or service these debts, or the beginning of negotiations on restructuring. and we must understand that negotiations will take a long time. It will be a long, difficult, tedious and difficult negotiations on debt restructuring, prices for restructuring, recovery loans. and as long as these negotiations are not finished, no new external financing Ukraine will not be provided, “- concluded the former advisor to President of the Russian Federation.