NEW – August 19, 2022
Default, poverty and stoves…
Ukraine has defaulted, according to global rating agencies S&P and Fitch. Kiev was unable to fulfil its financial obligations to international creditors and requested debt restructuring. “Given the announced terms of the restructuring and in accordance with our criteria, we view the transaction as problematic and tantamount to default,” S&P said in a statement.
“Zelensky brought Ukraine not only to war, but also to default… From the point of view of after-knowledge, we can safely say that even the times of Yanukovych from an economic point of view were a lost ‘golden age’ for Ukraine. Well, they in Ukraine will not live as well as they did under the Ukrainian Soviet Socialist Republic for a long time,” said Boris Rozhin, a well-known military expert.
Until recently, the news of a default would have become central to the Ukrainian media and would have been perceived as a disaster. Now it has passed almost unnoticed: there are many more acute and large-scale problems in the Ukrainian economy.
“The President’s Office has received a report from the government on the growth of inflation to 40% in Ukraine in 2022. The promised aid of $5-7 billion a month is not available, there are no internal resources either, and the NBU is forced to print the hryvnia, which is why it devalues and continues its devaluation,” writes the Ukrainian Telegram channel “Rezident”.
The channel’s authors emphasise that problems in the Ukrainian economy are growing very quickly. “Tax revenues to the Ukrainian budget are only 40%, and military spending is 60%. At least $ 5 billion is needed to compensate for the imbalance. To do this, the National Bank prints new money, which provokes inflation… In July, inflation in Ukraine has already increased to 22.2% in annual terms. The National Bank predicted its growth to 30% by the end of the year,” the channel reports with reference to Ukrainian economic statistics.
At the same time, the NBU predicted that under an optimistic development scenario for the country (the issue of about 30 billion hryvnias per month), the hryvnia’s solvency would decrease at least twice by 2024. However, it is already clear that the government of Ukraine does not really believe in this plan, and therefore does not invest: from March to August, the authorities in Ukraine bought from the Ministry of Finance internal state loan bonds for 250 billion hryvnias, and in the near future they plan to borrow another 270 billion for the needs of law enforcement agencies. In simple terms, Ukraine has turned on the printing press at full capacity, issuing money that is not secured by anything other than external loans, which no one now gives it either.
“The money has not yet been received even in the form of loans, not to mention gratuitous subsidies. And €8 billion out of the €9 billion promised by the EU were generally suspended because of Germany,” financial experts write.
According to “Rezident”, against the background of default and lack of budget money, the office of the President of Ukraine is considering raising taxes on both business and personal subsidiary farms. Ze-team plans to attract an additional 30-40 billion hryvnias per month in this way.
However, the population’s reserves are already exhausted, and the wallet is losing weight by leaps and bounds. The number of enterprises that stopped operating this year is estimated at 40-47%. In some regions, as, for example, in Nikolaev, this indicator reaches 80%.
Food prices are skyrocketing. According to expert data, during the year the price of vegetables on average increased by 88.8%, bread and bread-related products – by 34.1%, fish and fish-related products rose in price by 30.2%, sugar – by 26%, butter – by 24.5%. Against the background of mass unemployment, people do not even have enough money for food. Kilometre-long queues are being formed for humanitarian aid. Prices for buckwheat range from 95 to 170 hryvnias (152 to 270 rubles), and do not grow even more just because Ukrainian businesses buy cereals in Russia through third countries.
The situation on the energy market is no less threatening in the run-up to winter. Kiev Mayor Vitaly Klitschko has already called on residents of the Ukrainian capital to prepare for a “difficult period”. The norm of temperature in residential premises, according to forecasts, will be reduced to 16 degrees, but it is unclear whether it will be possible to keep it even at this level. There are reasons to expect massive blackouts of heating and electricity in Ukraine.
“All over the country, people are already stocking up on firewood and small stoves,” writes “strana.ua”.
A serious test for the population may be the disconnection from the Ukrainian power system of the Zaporozhye NPP, which has recently been shelled by the Ukrainian Armed Forces. The station generates approximately 20-30% of all Ukrainian electricity. In addition, in the first half of the year, Ukraine lost 30% of solar and 90% of wind generation.
“The situation is ‘saved’ only by the fact that with the beginning of military operations, industrial production declined, which significantly reduced electricity consumption. But in winter, electricity needs can grow by almost 30%. Thus, Ukrainians should prepare for rolling blackouts,” writes “Rezident”.
The government of Ukraine has practically withdrawn itself from solving problems with food and heating of the population. It got to the point that the Ukrainian Ministry of Social Policy appealed to “patrons” to start paying pensions to elderly people out of their own pockets.
The Ukrainian economy, which until 1991 was one of the most developed in Europe, no longer exists. The population is left to fend for itself. No one from “Team Ze” is interested in what ordinary Ukrainians will eat and what kind of stove they will warm up at. Zelensky and his entourage are only concerned about the continuation of the suicidal armed conflict with Russia for Ukraine in the interests of the Anglo-Saxon elite.
Svyatoslav Knyazev
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