May 4th, 2010
agency Standard Poor `s reported that the continuing political risks in Ukraine after the elections will not prevent the new government to adopt the budget and to resume work with international creditors. This will allow the state to cover the budget deficit and minimize the risks of default. Ukrainian experts confirm the optimistic assessment of SP, since the volume of external payments in 2010 were negligible.
International rating agency Standard Poor `s (SP) said on Friday that despite the numerous threats to financial stability, the situation in the public finance of Ukraine in 2010 will gradually improve. Expected GDP growth of 4% and the resumption of cooperation with the International Monetary Fund (IMF) in late spring and early summer. Threat to the financial system of Ukraine will be political instability, change of the National Bank and the law “On state social standards and state social guarantees”.
SP
Experts believe that the law will not work because it will increase the budget deficit to 2,5-7% of GDP. At the same time, the remaining amount of the IMF loan in the amount of $ 5,500,000,000 will be able to cover only 5,5% of the budget deficit, and the possibility of attracting other external borrowing is limited. In 2010, Ukraine has to pay a foreign loan to 35.1 billion Japanese yen ($ 392.3 million), and therefore the SP continues to believe that “default Ukraine is not inevitable.”
No 2010 state budget, according to SP, a positive effect on financial stability. “This means that at least during the I quarter of 2010 the new government will be able to make expenditures in its sole discretion within the lower budget costs. Read the rest of this entry »


