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Wednesday, March 14, 2018

Ukraine has called the size of the losses from the blockade of Donbass

Ukraine continues to count the losses incurred by the economy in connection with institutionalized blockade of the DNI and LC. To engage in “accounting” the government urgently had due to the fact that the IMF has postponed consideration of the allocation of the next tranche of “independence.” The Fund is required to provide calculations of the economic impact from the recent actions of the Ukrainian authorities. The Prime Minister and financial authority of the country differ in the evaluation of possible losses. And very significantly.

photo: pixabay.com

On the eve of Prime Minister Groisman, without which the decision on introduction at the state level a full transport blockade of the breakaway republics, said that the economic impact will be very noticeable. According to him, in 2016 from companies that are in DND and LNR, Ukraine received taxes on 32 billion. But on Monday, the Ukrainian Ministry of Finance made their calculations and said that it’s not so bad. They estimate that 40 companies, which came under control of Ukraine could bring the country only 2 billion UAH of taxes. While the Finance Ministry has not calculated how much the country will receive less funds from the stopped enterprises on the territory of Ukraine, how many will receive less money from exports. Moreover, the Ministry of Finance is not even made calculations on how much the country will lose from the departure of the “daughters” of Russian banks.

Meanwhile, Ukrainian economic analysts are already making their calculations of economic loss and the development of the situation in the country given the fact that the blockade will continue, at least until the end of the year. Considered two scenarios — optimistic and pessimistic. Optimistic is if the economy adapts to new conditions of existence. How, though, does not say. But if this happens, then the decline in GDP could reach 1.3%.

Losses from reduced exports are projected at 1.2 billion dollars, and imports could be reduced by 0.63 billion us dollars. And the rate of the national currency to the dollar in this scenario, by the end of the year will rise “only” to three hryvnias and up to 30 hryvnia per dollar. However, given the fact that the budget was the rate of only 27 UAH may change the expenditure side of the budget. First and foremost, it concerns the servicing of public debt – discharge of the debt and guarantee obligations of the state. According to preliminary estimates, the minimum requirement for the repayment of the debt may be up to 5.9 billion UAH. Considering all factors, the optimistic scenario assumes a minimal negative impact on the budget – amounting to 2.2 billion UAH.

If the economy can not quickly cope with the challenges, GDP will fall by 2%, or even 5%. Losses from reduced exports may reach $ 1.8 billion. Import could be reduced by $ 1 billion. The hryvnia to the dollar by the end of the year could rise to 33 hryvnias for “green”. In this case, the amount of repayment will grow to 7.8 – 14.6 billion UAH, respectively, the impact of the embargo on the budget will be evaluated almost 21 billion UAH.

However, some experts have estimated that if you take the losses in the sector — the decline of taxes, the allocation of funds for the purchase of anthracite abroad, the loss of export revenues — it could be about 70 billion hryvnia.

Prime Minister Groysman has warned that the most vulnerable in such a situation is a Pension Fund underfunding which today is 50%, and in monetary terms about $ 150 billion. Added fuel to the fire and in the national Bank of Ukraine, which reported that will not be able to compensate the depositors of losses from Russian banks. According to the Deputy head of the National Bank of Ukraine Kateryna Rozhkova, the Ukrainian citizens are kept in Russian banks in the amount of 21 billion USD. In the case of their liquidation, the Deposit guarantee Fund to compensate the population of just 8.5 billion hryvnia.

Out of all this succession of numbers, it becomes clear that the government of Ukraine can not yet with certainty to estimate the total amount of losses. Data are given only for some selected indicators. They don’t look too scary.


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