MOSCOW, July 2. /TASS/. Ukraine is staring down the barrel of a very bad deal coming from the West to restructure its accumulated debt which will be even worse than a hypothetical default, Kiev economist Alexey Kushch said.
"By the way, there will be no default in Ukraine. Most likely, what we will get is a raw deal on debt restructuring. Which is even worse," he wrote on his page on Facebook (prohibited in Russia due to its ownership by Meta, a designated extremist organization). According to Kushch, a default in Ukraine "during the war would not be so terrible" because, besides other things, the country is not borrowing privately while the West’s aid is not commercial but geopolitical.
"What does unfavorable restructuring mean? They will write off the bare minimum, will give a short deferral, won’t lower the percentage (or will lower it insignificantly). Additionally, what they write off will be accompanied by various ‘instruments of restitution’ for creditors, tying payments to them, for example, to the volume of tax revenues," the economist explained.
Kushch added that back in 2022 he cautioned that Kiev was losing a "historic window of opportunity" in order to cast off the "debt noose." "As soon as we receive long-term packages of Western financing, nobody will write off anything serious for us anymore," he stressed.
Ukraine’s economic problems
Earlier, the Economist reported that the Ukrainian government may announce a default as early as August in the event they fail to reach an agreement with investors on restructuring debts.
That said, the Ukrainian cabinet of ministers in the budget declaration for the next three years included an almost halving in financing from partners by 2027 as well as a significant drop in the value of the hryvnia. Additionally, the government is proposing not raising the minimum wage and cost of living for the next three years.