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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Hryvnia will Stand Firm for Only Two Weeks Unless Supported Financially

13 November, 2012 - 00:00

Last Tuesday, Viktor Yushchenko, Head of the National Bank of Ukraine made a sensational statement at a joint session of the government representatives, Parliamentary factions leaders, and committee chairpersons. The point of this statement is that NBU will be able to preserve hryvnia from collapse for no longer than two weeks, and extraordinary measures are needed.

This statement evoked a shudder but understanding in the audience. Huge payments on foreign and domestic debts exceeding all Ukrainian budget revenues are due during this two week period. The financial crises that have recently stunned Seoul, Djakarta, and Moscow made everybody look to Washington which in fact controls whether the IMF will decide to give Ukraine a $2.5 billion EFF loan. Viktor Naiden, an Ukrprom Corp. analyst and doctor of economics, comments on the current situation for The Day: we are reaping the results of the National Bank financial policy aimed at strangling production, which in fact is idle and profits are still falling. Near collapse of the hryvnia and inflation today seem unavoidable despite all the stabilization efforts conducted by the National Bank. Then there will be a sharp rise in prices against the background of wage arrears. The IMF loan will be useful if it is used as an initial impetus to get the economy moving. True, there is practically no hope of this happening. Instead, our children will inherit yet another debt."

 

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