Economists, businesspeople warn Ukraine of crisis if program with IMF disrupted
The Ukrainian state is on the verge of a deep economic crisis, and the only acceptable option for its prevention is to continue financial cooperation with the International Monetary Fund (IMF), speed up reforms and fight corruption, according to an open letter to Ukrainian society, which was signed by a group of Ukrainian economists and businesspeople.
"The Ukrainian government must pay more than $3 billion to creditors in the second half of this year and about $7 billion next year. The state does not have these funds, and the sources of their receipt are not yet available," the authors of the appeal say.
They note that the failure to pay debt means a catastrophic devaluation of the hryvnia and the inevitable impoverishment of the majority of Ukrainian citizens.
In their opinion, there are three options for paying off the debt, in particular, continuing the program of cooperation with the IMF, loans from private investors, and a radical reduction in budget spending.
"The option with private investors, in fact, means only postponing the problem for one year, which will trigger an even greater tightening of the debt loop, since the money can be borrowed at 8% or even 10-12% at the least," the authors of the letter said.
They added that a radical reduction in budget spending on pensions, wages, education, medicine and defense was unlikely.
"Therefore, further cooperation with the IMF remains [the only option]. The annual loan rate is 3%, but this program will not continue until Ukraine returns to the path of reform," the letter says.
According to its authors, Ukraine has not even months, but just several weeks to choose the right option before the parliament leaves for vacation.