Who will save Ukraine from bankruptcy?

KIEV, Monday

Elections were held in Ukraine yesterday with Mr Viktor Yanukovich emerging winner ahead of Prime Minister Yulia Tymoshenko.

However, amid the talk about political processes and changes in the leadership of the country, there is no talk about the deep economic crisis the country faces.

Even as Mr Yanukovich prepares to occupy the office of President, the economy will still be the top issue. The global financial crisis and crude economic policy have put the country in a very difficult situation. Over the past few years, the external debt of Ukraine has increased several times and at the beginning of the crisis exceeded the country’s Gross Domestic Product, says Mr Christopher Granville, Managing Director of Trusted Sources, an emerging markets research company.

A $17 billion loan package by the International Monetary Fund that was supposed to solve the economic problems in the country managed only to delay the financial crisis looming in Ukraine.

Despite the fact that the IMF has yet to grant Ukraine the last tranche of $3.8 billion after the presidential election, this money will not be enough for a long time for Ukraine.

Most important

The most important thing is that Ukraine in 2010 will have to begin to pay its external debt of $37 billion.

Given that the last few years, the economy has been maintained only through credit, and furthermore there was no progressive development, and the standard of living of the population only fell, after the receipt of the last tranche of the IMF loan package, the situation has become catastrophic. And this raises an objective question to the Ukrainian leadership.

How will the new leader address the economic problems that directly affect the lives of the people?

Already it is clear that the newly elected president and government will have to abandon campaign promises and drastically reduce government spending.

The budgeted deficit of the country in 2009 amounted to about 12 per cent, mostly through printing more cash.
It is reckless to count on further loans which only more strongly force the country into debt, without changing anything fundamentally in the country. (Agencies)