With civil unrest on the streets of Ukraine showing few signs of stopping, we ask four ECR experts if a solution can be found to the divided country’s problems.
Second, the Ukrainian economy cannot return to the situation that prevailed last November. Even if Russia would stick to their earlier agreement with president Yanukovich and lend $15 billion to Ukraine, the country would run out of money before the end of 2014. And the longer the political situation remains tense, the larger will be the negative effect on the economy. All this means that Ukraine will need additional financing, or it needs to implement drastic austerity measures soon, or a combination of the two. According to the IMF, Ukraine's total public sector deficit in 2013 was close to 8% of GDP, when one takes into account the subsidies in the gas sector as well. The longer the political situation drags on, the larger will be the needed economic adjustment. And it is already very large.
This article was originally published by ECR. To find out more, register for a free trial at Euromoney Country Risk.