Topic: Whether so there will be a default of Ukraine?
Casually came across on the way in Google. It has been written in July, but I think actually and now. https://www.facebook.com/permalink.php? 8993618796 In the end there is an interesting forecast. One of these days rating agency Fitch published the next ratings across Ukraine, which all analysts amicably and maliciously christened as "". Without going into details and abracadabras everyone there like With, and , the frightened inhabitant hasty rushed on hard currency searches. Whether correctly it does? What these "" mean ratings? When there will be a default? Unless we did not close this question last year, thanks to efforts of madam Jaresko? Unless we do not do obediently all that to us the IMF orders? To understand with all it, we remind a scale of ratings Fitch for such problem countries, as Ukraine. It following: BB - Level of credit status below sufficient B - essentially insufficient level of credit status CCC - Is possible default CC - High probability of a default of a C - the Default is inevitable RD - Restricted default D - the Default Thus should be understood that ratings happen two types: short-term and long-term. Short-term ratings are appropriated on debts to periods till 36 months. Long-term, accordingly, from 3 years. In October of last year Ukraine was close to the full default when admitted delay on the debts before quotients to creditors and Fitch validly appropriated to Ukraine then rating RD. Just in 2015 and 2016. it was necessary for Ukraine to extinguish following obligations: 2015 - 4.7 $ together with percent of 2016 - 3.4 $ together with percent And on the end 2015 made where that only 5.7 $ that was a consequence of mass flight of the capital from Ukraine after triumph of "revolution of advantages", leaving of Crimea and the war beginning in Donbass. Clearly that on the end 2015 Ukraine was three times the bankrupt! For the sake of justice it is necessary to recognize that Ukraine already came nearer to financial to crash anyway. Yanukovych with Azarov tried to avoid it it, trying to force the West to produce it 15 $ the credit for the consent to sign Association. The West refused, and Putin immediately produced the demanded credit, and the price for gas reduced almost by 40 %, but demanded in changeovers to replace a geopolitical vector. Yanukovych agreed, and the Maidan - is not present. The followed events well-known and they define destiny of Ukraine and to this day. To avoid the full default in October 2015 to Ukraine it was possible only therefore Mrs. Jareske managed to agree about re-structuring of our debts. Conditions of re-structuring the following: 1. To Ukraine wrote off 20 % from 15 a debt to commercial creditors., i.e. 3 $. 2. To Ukraine granted delays grace period for three years. That is 2016-2018g.g these years we only service percent at a rate of 963 million $ annually (under the rate of 7.75 %) 3. To Ukraine prolonged period of payment of all debt for 4 years, to 2027. All would Seem - peaks, we replaced rather underwear and is proud showed a fig northern to the neighbor. But later 8 months after joyful event again were burst by a bolt from the blue. Unruly agency Fitch again appropriated to us a rating on short-term debts only at level "With". The default is inevitable!! But why?! Really the default is inevitable and when it to happen? And how re-structuring and so on? Let's try understand that that happens. For today we make 12.7 $. (On 30.04.16) the Cumulative exterior debt of the state makes 44, 5 $ (on 30.04 16) That happens to tendencies? In other words. Whether we can earn currency basically? Alas, similar is not present. Following the results of the period January - May we received 700 million $ the negative balance. And, obviously, till the end of the year it reaches 1.5-1.7 $ as we will buy the Russian gas in Poland and Slovakia, and also coal in States. Well if to agree to ship coal for . Yet it is visible at the expense of what we can break a situation because export from the beginning of year fell to 14 % in comparison with last year. Thus, strangely enough, the principal export partner on - former there is Russia that Fitch considers as additional risk. That is to 2019 we lose on foreign trade yet less than 4.5-5 $ that finishes ours to 7.5 $. And we did not forget that over Ukraine a sword of Damocles hangs 3 more $ a debt to Russia?! Taking into account this debt, which IMF recognized as sovereign, despite all our protests, the situation becomes absolutely pitiable. Total, we have 3.5 $ on the beginning 2019 And in 2019 it is necessary to start to pay to Ukraine the debts before private creditors. The schedule of payments following 2019. - 3.109 $2020 - 3.377 $ and so on to 2027 And there are still debts at a rate of 4.5 $ before IMF and on 1 $ in front of the USA and Germany. Well, all right, with these as that we agree about recrediting under what reforms. They do not throw us on worry of Russia! But is 23 more $ a corporate debt of our business which also puts essential pressure upon the rate of exchange and together with public debts can . Fitch appropriated to Ukraine a short-term rating on foreign currency at level "a default it is inevitable". The agency it expresses the point of view on ability of Ukraine in flow of 36 months to carry out of the obligations on debts as yet does not see the positive factors and tendencies. But under long-term obligations (more than 3 years) the agency appropriated a rating SSS - "the default is possible, but is not mandatory." That is Fitch hopes that Ukraine all the same has chances by means of the West and IMF to carry out some reforms in long-term perspective which allow Ukraine to service the public debt. And in the end a tar spoon in a tar butt. On short-term debts in our national currency to grivna Fitch also appropriated to Ukraine a rating "With" - the default is inevitable. But with our banks - holders of bonds of an internal loan our Ministry of Finance and as agree. Let try to disagree only on re-structuring - validity and leadership of the right on get quickly acquainted with that that such. And now it is time to do outputs: 1. In 2016 the probability of a default misses 2. In 2017 Ukraine loses court of Russia and will be forced to pay 3 the debt, run percent and a legal cost in the total where that 200-250 million $. The USA and EU assist in payment of this debt as the IMF refuses to help. 3. In 2019 Ukraine cannot pay the debt to private creditors according to the stated schedule of re-structuring. If Ukraine cannot agree about re-structuring she declares a default again. Private creditors again go on re-structuring, only if Ukraine in 2017 and 2018. it will be successful to implement the program of reforms under the direction of IMF and obtains credits for the total 12.5 $. 4. Works Nothing, if the stable peace on Donbass is not reached. Without the world of investments there will be no also a default will be almost inevitable. I am convinced that the next years all actions of the Ukrainian power will will be defined by the described logic. Is, the truth, one remark. Ukraine has the right to refuse payments of the debt to private creditors if there will be no gross national product growth. Such condition is written down in the contract on re-structuring of debts. However, if all these years the economy of Ukraine does not grow, the social fabric of a society will be broken simply off with unpredictable consequences. It more than obviously and to analyze such variant to me it is personally opposite. And now, attention, my strategic forecast for five years. 1. In flow of 5 years it is impossible to solve economic problems of Ukraine. The economy will be , and social intensity will promptly rise. The reasons of it: - absence of politically responsible elite - contradictions on a line the East - the West of Ukraine - absence of a civil society, populism and a paternalism - huge rupture on income levels between poor and rich 2. It is necessary For the decision of problems of Ukraine not less than 15-20 years of the continuous reforming. The eligibility of the power in reforming questions that is impossible for the above-stated reasons 3 should be thus provided. In flow of 8-12 months the majority of the countries of Europe realizes what to solve problems of Ukraine in intermediate term perspective it is impossible in a type of absence of adequate political forces. 4. As consequence of EU cancels sanctions against Russia in flow of 6-12 months. Germany and France cannot convince southern any more and central countries of Europe to continue sanctions against Russia. Only decorative sanctions across Crimea will be saved. The USA the sanctions saves. 5. The power in Ukraine considerably changes. The new power with the consent of EU and the USA recovers trade relations with Russia. All mutual trading restrictions will be cancelled. Ukraine starts to buy gas from Russia which gives the attractive price again. 6. enters, upon, in federal relations with Ukraine. And it will serve as a warranty of that that Ukraine does not enter the NATO. 7. The agreement on Association from EU to the full not to take effect and in process of European Union decay. Loses the urgency. 8. The Kolomojsky sells Privat bank and the channel 1+1 and abandons Ukraine 9. Russia starts to compensate to Ukraine a damage put by annexation of Crimea and a question sharpness will be removed. As consequence of these actions Ukraine avoids a default and to be returned to regenerative growth of 2-4 % in a year in flow of 5-8 years. The country licks the wounds and calms down the next 10-15 years.