16:40 26.09.2018

Ukraine to lose 2.5-3% of GDP over Nord Stream 2

2 min read
Ukraine to lose 2.5-3% of GDP over Nord Stream 2

Ukraine's Ministry of Finance has listed Gazprom's implementation of the Nord Stream 2 gas pipeline project among main fiscal risks.

"The implementation of the Nord Stream 2 project will result in losses due to a decrease in exports of services by about 2.5-3% of GDP (only direct losses)," the ministry said in a statement on Wednesday.

Among other external risk factors indicated by the ministry is the implementation of tax reform in the United States, which could trigger an outflow of financial resources from emerging markets due to the need to cover the U.S. budget deficit against the background of a Fed interest rate hike as a reaction to active fiscal incentives.

As before, a threat of escalation in Donbas, eastern Ukraine, remains a key risk, which will have unpredictable consequences for the economy, the Finance Ministry said.

It also sees as risks an increase in the import expansion of European consumer goods in the domestic market and the introduction of exit capital tax, which could lead to a loss of the state budget in 2019.

"The implementation of the structural reforms foreseen in the program of cooperation with the International Monetary Fund is extremely important for macrofinance stability in Ukraine and access to financing from the IMF and other international partners," the ministry said.

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