Ukraine budget deficit stands at staggering UAH170 bln. It’s a road to default and inflation, says Viktor Pynzenyk. Photo

Previous Next

According to Pynzenyk, Ukraine’s state debt runs into 35% of the GDP, or three times less that of Greece. Still, the growth rate of Ukraine debt is bad, which puts Ukraine in a worse position than Greece whose debt has slowed down to grow.
While Ukraine’s debt stood at UAH90 bln in early 2008, it has reached UAH315 bln in early 2010. The cause of such big debt growth has not been removed as 40% of the budget spending is covered by loans.  
 “It’s a road to nowhere. Apparently, the present regime of Yanukovych has no grasp of the situation or will to deal with it. They are merely talking reforms, not implementing them,” Pynzenyk claims. He does not rule out the regime may take the way leading to hyperinflation. Last year, Ukraine was able to find the rainmaker, IMF. Pynzenyk assumes that this year the rainmaker will be Russia. However, new loans won’t save Ukraine from the budget deficit, they will just keep it covered. This policy may bring inflation and default, Pynzenyk warns.
The way to deal with the problem is to cut spending, the ex-finance minister advises.

Photo: Marian Striltsiv