Yatsenyuk admits that IMF bailout is too small to shore up Ukraine’s finances

Saturday, March 29, 2014
By Paul Martin

29 March 2014

Less than 24 hours after the IMF announced it will try to shore up Ukraine’s finances, the country’s Prime Minister admitted that the bailout package promised by international lenders is not enough to cover the fiscal deficit.

In an interview for Ukraine’s state television channel, Arsenyi Yatseniuk said that the current budget deficit is equal to 46 billion dollars and it is growing. Given that IMF and the World Bank promised to offer Ukraine a combined sum of 17 to 19 billion dollars over the next two years it is easy to see that the bailout package needs to be tripled in order to cover the deficit. Ukraine has no other sources of financing and foreign help is the only possibility to avoid default. To understand the magnitude of the crisis it should be noted that according to the latest version of the national budget, the combined state revenue in 2014 will be around 4,5 billion dollars while the government intends to borrow at least 18 billion dollars. Every reasonable credit analysts will put Ukraine’s sovereign debt on “default watch” because a country whose income is 4 times smaller that the funds it obtains from foreign borrowing is obviously insolvent and will soon be bankrupt.

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