OPPOSITION PLATFORM – FOR LIFE MP Serhiy Lovochkin believes that the limited budget resources should be spent on social protection of citizens first. Therefore it’s crucial to initiate talks on restructuring the national debt with creditors, including Eurobond holders, government loan bond holders, and international financial institutions.
His inquiry reads that financial activities of the state have been lately reduced to raising debt capital to repay old debts, which resulted in $83bln in total national debt as of early March.
This, in turn, resulted in significant increase of the national government debt-to-GDP ratio, which is the most important measure of a country’s debt load. For Ukraine, it rose from 39.9 percent in 2015 to 50.1 percent in late 2019, which is much higher than European average of 31.3 percent.
“The spread of coronavirus epidemic in Ukraine and economic crisis it provoked aggravate the problem of the debt load even further. By the end of this year, Ukraine must pay back the total of 310bln hryvnia, including $7.7bln of the national debt in foreign currency,” the politician said.
He believes it will not be possible to fund these payments with raising new debt capital, because the markets of foreign commercial loans are mostly closed due to the global recession, and internal market of national government bonds has shortened significantly because of fewer and fewer nonresidents who constituted the majority of its players recently.
“Given these circumstances, the only guaranteed resource for repayments of the national debt and its interest is budget funds, including the government’s account balances. Still, budget income was limited even before it was hit with the first consequences of the coronavirus epidemic,” Lovochkin said.Follow @serhiylovochkin