Despite the grievous state of the Ukrainian economy, the IMF said it will continue to lend money to Ukraine, so Kiev can complete economic restructuring.
And Ukraine’s national debt have amassed to one trillion hryvnias ($47.6 billion), which accounts for 100 percent of country’s GDP, leader of the opposition bloc faction in the Ukrainian parliament claimed, RT reported.
"In the event that a negotiated settlement with private creditors is not reached and the country determines that it cannot service its debt, the fund can lend to Ukraine consistent with its Lending-Into-Arrears Policy," IMF Managing Director Christine Lagarde said.
The IMF chief's comments come as Finance Minister Natalia Yaresko and Ukrainian Prime Minister Arseny Yatseniuk wrapped up their promotional trip to US, which also included pleading with the IMF. Kiev hopes to persuade the international lender to release a $1.7-billion tranche of aid in July, as part of a $40-billion aid package that the IMF and Ukraine's foreign allies have committed to.
Ukraine's economic program (2015–18) seeks to implement macroeconomic and structural reforms. It’s designed to focus on fiscal consolidation and energy sector reforms as well as the banking system. Kiev hopes to generate $15.3 billion in public sector financing during the program period.
Ukrainian authorities also aim to bring public debt to under 71 percent of the country's GDP by 2020. Finally, the country seeks to gain economic stability by balancing the budget’s gross financing needs to no more than 12 percent of GDP annually in 2019–25.
Bankrupt Economy
Yet Kiev's virtually can’t make the debt payments, when a $500-million bond matures in September. Upon his return from Washington, Ukraine's PM threatened to freeze debt repayments if no deal is agreed with private lenders. Kiev claims its military campaign in the east of the country is draining internationally borrowed funds.
"Today, Ukraine spends as much on foreign and domestic debt servicing as it does on defense,"Yatsenyuk told a government meeting. "The budget can no longer afford it -and not just the budget. The Ukrainian people can no longer live like this," he said.
"We will not take money out of Ukrainians' pockets to pay foreign debts," he warned.
Lagarde seems to agree that Kiev's "international reserves cannot be used for sovereign debt service without the government incurring new debt, which would be inconsistent with the objectives of the debt operation."
Yatsenyuk told the politicians that he expects the IMF board to meet in July, “so, all the preliminary conditions have to be agreed and approved by July."
The creditors' committee led by US asset management firm Franklin Templeton has proposed drawing some $8 billion from Kiev's central bank reserves as part of the restructuring plan, which Yaresko has called "unacceptable."
As the negotiations continue, creditors issued a statement blaming Kiev for a lack of action.
Debt 100% of GDP
Ukraine’s national debt have amassed to one trillion hryvnias ($47.6 billion) and is 100 percent of country’s GDP, Yury Boiko, leader of the opposition bloc faction in the Ukrainian parliament, claimed Saturday.
"Ukraine’s debt is one trillion hryvnias and has reached 100 percent of GDP. During the last year, it increased by three times. It is a serious problem the government tries to ignore," Boiko said.
According to the lawmaker, the Ukrainian government is living on credit alone; it just recently borrowed $12 billion.
Ukrainian officials make foreign visits only with one goal – to ask for loans, Boiko added. While the real economy remains in crisis, the government is not taking measures to increase its budget income and to index wages and pensions.
Earlier, the Ukrainian Finance Ministry reported that as for March 31 the national debt was an estimated $54 billion. However, financial experts have repeatedly warned that by the end of 2015 the situation would be critical, with the debt comprising 90-100 percent of GDP.
