DEBTORS WILL GO BANKRUPT. THERE ARE ALREADY INNOCENT VICTIMS

The government decree On Additional Measures to Secure the Funding for State Guarantees of the Cabinet of Ministers of Ukraine should have demonstrated the government's determination to fight those, who refuse to pay their debts and increase the government's credit rating as a borrower able to pay off its own debts.

The decree directed the State Tax Administration and General Prosecutor's Office to open cases against nine resident legal, which have declared themselves bankrupt and failed to pay off foreign loans received under governmental guarantee. The Day correspondent questioned the management of the Cheksil joint stock company and was amazed to hear the firm's vice president announce that the company does not owe the state anything.

True, Cheksil received a foreign loan of DM 19.3 million back in 1994 and regularly serviced the debt. The scheduled pay off term was last December. By then the company had signed agreements with the Finance and Defense Ministries, according to which money paid by the Defense Ministry to Cheksil for cloth would be calculated as the corporation's regular loan payment. The firm also conducted its own audit. Obviously, the Cabinet of Ministers debtor's list was composed of enterprises which had payment arrears on foreign loans as of December 1, 1997. The point is that the list includes both firms which made regular payments and those who never thought of doing so.

As of early 1998, the government repaid $268 million on foreign loans made under government guarantee out of the state budget. According to the Finance Ministry, in 1998 this figure will reach $324.1 million, from which $43.4 million will be penalties for late payment. Foreign loans under government guarantee were granted enterprises under various conditions. The first loans made in 1993-1994 were to the state enterprises, and those who were able to lobby for repayment at state expense no longer have debts. Others became joint stock companies and continue payments under threat of bankruptcy.

Later loans were secured by collateral. It seems that in such cases it would be easy to sell the collateral and pay off the debt, but unfortunately the State Tax Administration is unable to do so.

Yet another category of corporate deadbeats are firms such as AvtoZaz and LINOS, which owe huge amounts. And the government has not yet found an adequate way to deal with them.