Ukraine lost the case about 3 billion dollars it owes Russia. At least that way formally evaluate interim decision of the High Court in London, the Russian Ministry of Finance. Although Kiev has already filed an appeal, the consequences of this decision will be bleak for the Ukrainian economy.
London's High Court issued an interim decision in the case of the debt of Ukraine to Russia on 3 billion dollars. It states that the case will be considered on an expedited basis. This means that it will go without a full-scale investigation, which involves an oral hearing. A request for an expedited procedure contained in the request Russia, while Ukraine insists on a full-scale hearing. That is, the judge ruled in favor of the Russian side.
As reported by Bloomberg, in the case of the judge rejected all of the arguments of the Ukrainian side, including Russia withdrew from the charges of political pressure on Ukraine. Kiev, of course, intend to challenge this decision.
The judge said that he carefully studied the statements of the head of the Ministry of Finance of Ukraine Alexander Danilyuk that the filing of the suit by Russia is "a tool to exert pressure on Kiev" in a series of actions such as "military occupation, destruction of property, illegal expropriation of assets and terrible humanitarian consequences, Tass reports. It was on this basis that the Ukrainian side demanded a full review of the case. However, the court ruled: since the lawsuit was filed on the payment of debt obligations, the listed issues are not part of its jurisdiction, so a full-fledged legal process is not necessary.
Moscow believes that Ukraine's position in this matter was initially losing. And the current interim judge's decision only confirms the correctness of Russia. Therefore, it is likely that the court will soon oblige Ukraine to pay the same Moscow 3 billion dollars. This market is also sure - bonds of Ukraine after the court decision cheaper.
The real point at issue in this case was one, and he was concerned that the loan size - treat it as commercial (Kyiv position) or the state, the sovereign (the position of Moscow). At the time, the sovereign debt admitted even the International Monetary Fund. Actually, the decision on the accelerated proceedings mean that a British court on this matter shared the view of Russia.
Ministry of Finance described the decision of the High Court in London has as final and binding Ukraine pay Russian debt on Eurobonds at 3 billion dollars. The Court pointed out that Ukraine has no arguments for non-payment of this debt, according to the Russian Finance Ministry. In other words, the agency believes that the exposure of the debt repayment plan, a decision on the form of debt and the appeal of Kiev - this is a formality, that fact will not change.
The final defeat of this case will be a major blow not only for the political ambitions of Ukraine and its economy. Lenders already and so change their attitude towards Ukraine. Recently, the IMF has once again postponed the discussion tranche of Ukraine, now the World Bank changed his mind to approve a loan in the country 150 million dollars under a simplified procedure. For comparison: in Kiev year 2014 has received from the International Monetary Fund 4,6 billion dollars, and in 2015-m - 6,7 billion dollars in 2016-meters Ukraine was allocated just 1 billion dollars.
The main risk that worries the IMF, World Bank and others - it is a default of the country, which actually occurred in the year 2014, but formally postponed only because of IMF lending. The financiers had hoped that the credit support Ukrainian economy will be able to move from Russia to the European markets, and to stand up.
But it all went very wrong - the country was struck a severe economic crisis. There has been a gap at the end of last year, when the Ukrainian economy is beginning to show weak growth. However, hopes for growth crumbled because of the actions of Ukrainian Nationalists and the Ukrainian government inaction. Ukraine own hands dealt several hard blows on its economy.
First it was the blockade of Donbass. Then, under the same scenario began deportation from Ukraine Ukrainian "daughters" of Russian banks. Not to mention the restrictions for the transfer of money Ukrainian guest workers from Russia to their homeland. Thus, Kiev has limited or completely blocked almost all major channels of foreign exchange earnings to the country.
"Compared with 2013 year, Ukraine's GDP fell by 14%. In dollar terms, Ukraine's GDP has fallen in 1,9 times or 89,1 billion dollars. During the three years of "reform," Ukraine's budget revenues declined by half, and unwound the power inflation-devaluation spiral has led to the total impoverishment of the population, "- says economist Alexander Ukrainian Koltunovich.
In other words, for three years due to the rupture of trade relations with Russia and Ukraine lost EAEC 27 billion dollars in export revenues in 2014-2016 years, counted Koltunovich. For comparison: this is 10 billion dollars more than what the IMF has promised to give four years of assistance programs. But most importantly, that the export revenue - is not loans that have yet to be given.
Damage from Ukraine Donbass blockade is estimated at a loss of 2,5 to 10% of GDP. Ukraine's budget will lose 1,3 billion dollars that came to the state budget in the form of taxes from the enterprises registered in Ukraine, but were in the DNR and LNR. Lost and alone, the steel industry and related industries is estimated at least 3,5 billion dollars.
A Ukrainian guest workers, which Kiev has limited translations, only officially sent home 7 billion dollars last year, and informally on 5 billion dollars more.
"For three years, the European Union, the IMF, as well as the whole world, was more than enough time to realize that Kiev is not capable of any economic transformation. Allocated tranches not have benefited the economy of Ukraine ", - says Alexander Koltunovich.
At the same time in Ukraine there comes a day when it will be necessary to give billions of dollars in debt. For three years the public and publicly guaranteed debt of Ukraine has increased three times - up to 1,93 trillion USD, which is equivalent to 70,97 billion dollars or 81% of GDP. "According to our calculations, the debt burden on a Ukrainian is about 45,3 thousand UAH of the state debt of the country, on one working Ukrainian -. 111 thousand UAH state debt of the country.. And taking into account the devaluation of the hryvnia, as well as attracting new loans will only be a burden anymore, "- indicates Koltunovich.
According to the source, this year Ukraine should pay for foreign debt 3,9 billion dollars, and in the next three years, as many as 22 billion dollars. It is with 2018, the Kiev should start to give new debt IMF (now paying the price of the old taken to 2014 years), as well as to begin the first payments under the debt to private creditors, which have been restructured (with 2021 years will have to give them a major part of the debt by tens of billion dollars). And this is no debt to the Russian Federation.
The possibility of payment of debts defined reserves. Gold reserves of Ukraine on March 1 2017 years 15,46 constitute billion. This, of course, not 5,6 billion dollars, as it was in March 2015 years. However, the reason for joy is still not enough. "To date, Ukraine owes the IMF about 13 billion dollars. In fact, the official foreign exchange reserves of Ukraine - is the IMF loans. So, if Ukraine will repay the IMF loans, the official foreign exchange reserves will be miserable again, "- says President of the Ukrainian Analytical Center Oleksandr Okhrimenko.
"To start the economy, the country needs to increase exports. And without Russia and EAEC countries, the BRICS and CIS to do will be impossible. Over three years have seen all of this. As a result, Kiev or write off these debts, or be defaulted, "- summarizes Koltunovich.