Ukraine: loans in economy and politics

The level of the shadow economy in Ukraine exceeds official data by the Ministry for Economic Development and Trade, according to which the shadow economy takes a 42% share in the country, UNIAN reports, citing the deputy Minister for Finance of the country, Elena Makeyeva. She says that the shadow economy takes 60% in retail, 40% in the pharmaceutical sector, 67% in light industry. However, this is not the only problem for the Ukrainian economy.

The international rating agency Moody’s Investors Service reported on a possible default of Ukraine regarding Eurobonds in September. Interfax-Ukraine, citing Moody’s report, states that there is still a risk of launching a debt standstill, despite paying interest yield on Eurobonds with repayment in July 2017. Experts believe that Kiev paid the debt off in July only to avoid breaking negotiations with private creditors.

An expert of the International Institute for Humanitarian and Political Studies, Vladimir Bruter, says that “the situation with the Ukrainian debts is not progressing. The IMF has offered to negotiate until July 31st, but the talks were postponed due to an absence of rapprochement between the parties. Ukraine cannot pay the debt off, it is obvious. Washington obviously cannot make creditors refuse any major part of the debt. Because it's a private pool, and Washington's influence in the private pool of American investors is always a little limited, because it requires something in return. Neither the private pool of investors, nor Washington, nor anyone else knows what return there can be from today’s Ukraine. That is why everybody is trying to maintain their positions and see what will happen. Nevertheless, the situation has become alarming.”

Moreover, Bruter believes that trust in the current leaders of Ukraine has always been overestimated: “Poroshenko didn’t receive any special trust after coming to power. His rating was artificially increased but it has been naturally declining. And now it has reached the current rates. As for Yatsenyuk, the sponsors of today's Ukraine have two courses: to dismiss Yatsenyuk before the local elections or after the local elections. Both ways are bad, and the decision will be taken according to the rating, whether the Popular Front manages to drive Petro Porosheko to a virtual bloc.”

The expert says that “if Yatsenyuk refuses to participate in the elections it will mean that he is deciding to withdraw from politics. This is quite possible if he is unable directly to influence the rating of power. In this way he can be sustained for some time after the elections. If he receives any absolutely terrible result, it will be very dangerous. In this case, some more immediate solutions should be taken. But they have some time, about a month."