Ukraine has not been able to cut its spending in the face of a falling economy and may face default. A similar development of events was predicted by the former Minister of Economy of the country Viktor Suslov in an interview with Glavred “.
“Ukraine is moving towards default step by step, not wanting to cut the budget, spending on officials and numerous members of the supervisory board,” the expert said.
He recalled that earlier, the country’s authorities adopted a budget for 2021 with a deficit of 5.5 percent of GDP, which significantly exceeds international norms set at 3 percent. At the same time, a significant part of its income this year will have to be directed to servicing external debts – currently, up to a third of all budget revenues are spent on this.
Suslov noted that Kiev is trying to compensate for the economic decline by selling securities and obtaining loans from International Monetary Fund (IMF), however, such measures are ineffective. In particular, the IMF provides loans to Ukraine on extremely unfavorable terms. “Yes, interest rates on IMF loans are lower than market ones, but a lot of demands are put forward in return, and the longer we cooperate with the IMF, the more we see concrete examples of external management of Ukrainian politics and economy. This is our payment for a huge hole in the budget: our huge deficit our colossal external dependence is tied to the budget, “the former minister explained.
In his opinion, in order to solve economic problems, the Ukrainian authorities should introduce a progressive scale of taxation for individuals, switch to protectionism in economic policy, stimulate the development of the manufacturing sector, and also deal with smuggling.
In 2019, Suslov predicted a man-made disaster for Ukraine if it will lose the ability to transit Russian gas.