The macroeconomic situation in Ukraine remains unstable, the vulnerability of the fiscal system in the past years has grown, World Bank Country Director for Belarus, Moldova, and Ukraine Satu Kahkonen has said.
She said in an interview with Novoye Vremia magazine that the vulnerability has increased in the past years, taking into account the fact that government’s expenses grew, as the government increased minimum salaries, pensions, and salaries of civil servants.
She said that the World Bank is concerned with how Ukraine will finance the payment of external debt, the peak for which will be at the end of 2018 and early 2019.
Kahkonen said that if the cooperation program with the International Monetary Fund (IMF) is not extended, the country would not receive money from the World Bank that could be provided to maintain budget and conduct reforms.
The provision of the money the European Union is planned to cover the deficit of the budget depends on the IMF, she said. Loan markets would also negatively react to this signal, Kahkonen said.
Earlier Ukrainian Finance Minister Oleksandr Danyliuk said that he did not see the preconditions for a default in 2019 or 2020: “There will be no default. We are doing everything to reduce the debt burden on our economy.” In particular, he said, this is facilitated by an annual reduction in the budget deficit, as well as Ukraine’s entry into the eurobond market in September 2017.
