Bankruptcy looming large for Ukraine: Economists
Iran Press TV
Mon Feb 24, 2014 4:21PM GMT
Bankruptcy is looming large for Ukraine amid the current political uncertainty grappling the Eastern European country, a number of economists have warned.
In an interview with Germany's international broadcaster Deutsche Welle on Sunday, Theocharis Grigoriadis, an economist with the Eastern Europe Institute, Free University of Berlin, said a bankruptcy is "absolutely possible" in Ukraine.
He also cited the risk of insolvency as the reason behind ousted Ukrainian president Viktor Yanukovych's decision to reject a trade deal with the EU and instead accept a loan from Moscow.
'There was at that time the threat of bankruptcy and Russia was the only country that could offer a short-term solution,' Grigoriadis said.
Thomas Baumann, head of the Eastern Europe department at the Association of German Chambers of Commerce, has also predicted that Ukraine will face problems paying for goods imported to the former Soviet Republic.
"Ukraine can only cover its imports for less than two months. That means that for the next six weeks Kiev can continue importing the goods to supply the country's needs," he said.
The warnings come a few days after Standard & Poor's (S&P) ratings agency downgraded Ukraine's credit rating by one notch from CCC+ to CCC.
The Ukrainian currency, the hryvnia, also lost more than 10 percent of its value against the euro since the beginning of 2014.
Ukraine has been rocked by anti-government protests since Yanukovych refrained from signing an Association Agreement with the EU on November 29, 2013, in favor of closer ties with Russia.
Kiev and Moscow reached a strategic economic and trade deal last December, which provides Ukraine with significant discounts on imported Russian gas and billions of dollars in credit.
SSM/AB/SL
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