Ukraine’s Last Chance – Finance Ministry’s Failures


August 6th, 2015

By: Yurasumy, – Translated by: Soviet Bear

As summer is gradually
coming to an end – the time to pay debts is coming now.  Back in March it was known that for stable work
with the IMF it is necessary to restructure the “urgent” Ukraine’s
debt, part of which must be written off.

In spring the Kiev
government was confident in easy accomplishment of this task.  However, at the beginning of the summer they
realized that the mission is impossible. Even exclusion of debts to Russia from
negotiation process and clarification of the IMF regarding private debts were
not helpful. Creditors hold their ground firmly. They agree to wait under the
guarantees of National Bank of Ukraine (NBU), but refused to write off the
debts.  This situation does not suit both
Kiev and the IMF. In this case, the guarantor of the payment will be the
National Bank of Ukraine and all the loans that this organization gets may be
confiscated to repay the debt. This means that financing mechanism of Kiev
regime will break down in case of an economic collapse.

Today the head of
Ukraine’s Finance Ministry Yaresko postponed the solution of this issue with
creditors till next week and said that this will be the last chance. They are
running out of time.

“Given the legal and time restrictions that
exist in achieving and implementing any agreement on debt restructuring in the
event of inability to reach such an agreement at the State level at the
beginning of next week, Ukraine will be forced to use alternative mechanisms
for financing its program of cooperation with the IMF. Because of these restrictions,
it is also the last opportunity to reach a common agreement on the eve of
payments on Eurobonds in September and October, and in anticipation of the next
review of the program of cooperation between Ukraine and the IMF, is scheduled
for September “

This tells us that
default is not just considered as a possible measure for the solution of
Junta’s debt problems but it is also one of the most likely options. But the
default blackmailing continues for month and a half with no results yet.

The end of this year
promises to be very difficult for the Junta. They need a billion dollars to buy
natural gas before the winter comes and as much during the winter. They need
1.5 billion of dollars to buy coal. They need over 500 million of dollars to
pay their debts. They need 3 billion of dollars they owe to Russia.  Not to mention Junta needs not less than 1
billion of dollars from budget to compensate for the difference in housing and
utilities rates (subsidies). Total 7 billion dollars on the liabilities.

The have 1.5 billion
in the government correspondent accounts (obviously accumulating preseason
subsidies). 10 billion.  In the NBU
reserves on August 1st. They have already received 1.7 billions in August. Total
5-6 billion may remain by the end of the year without foreign money-injections.
Not much, but not fatal. Especially in the winter, they
can save … on the population and industry.

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