Future of Ukraine’s economy Prepared by Yulia Beloglazova

Economic outlook
Political crisis
Standard and Poor’s downgrade of the country’s credit rating
Long history of poor performance
The credit agency downgraded the economy from CCC+ to CCC
The main reason is the high probability of lack of the financial assistance

Ukraine was in economic crisis long before the protests
Since the Soviet Union broke up, the economies of the former Soviet Union republics contracted sharply. Much the same happened to the Soviet satellites in Central and Eastern Europe.
Almost all have reversed the decline, but Ukraine has not. Its economy is still smaller than it was in 1992.

Ukraine's economic burden
Comparison to Poland (using purchasing power parity)
1992
Now
Economy of Poland
Economy of Ukraine
Economy of Poland
Economy of Ukraine
2 times
The amount of foreign debt in relation to GDP is 8%
A deficit of that size can be manageable if international financial markets have confidence in the economic outlook
But Standard and Poor’s declined Ukraine’s credit rating!

Who can help?
Russia
IMF
European Union
US
Russia has promised $15 billion to Ukraine. The promise was part of a trade agreement which triggered the current crisis. It has provided $3 billion so far, but with Yanukovich now ousted, it is not clear if the offer is still on the table.
The IMF agreed a $15.5 billion loan for Ukraine in 2010, but suspended the deal last year after Kiev failed to implement the required reforms.
It promised a loan of $825 million as part of the IMF bailout package.
The United States said it is ready to provide more financial support to Ukraine, in addition to the IMF aid.

Ukraine needs $35 billion over the next two years
The European Union and IMF are unlikely to commit money until they can negotiate the conditions of a rescue deal with a government formed on the basis of the election result
But here's the rub: Ukraine might not be able to wait that long

The main problems
Foreign currency reserves
Ukraine burned through $1.7 billion of foreign currency reserves in January.
It had about $17 billion left at the end of January
Some economists reckon those reserves could fall to $12 billion or less by the end of this month - worth just six weeks of imports.
Currency
The hrvynia has fallen nearly 12% since the start of the year
Debt
Ukraine has about $13 billion worth of debt falling due this year, including a $1 billion bond in June, arrears on Russian gas imports, and about $3 billion owed to the IMF.

The main problems