SD: Is there an important part of the Ukrainian debt illegitimate?ĮT: The answer is yes: the overwhelming majority of the Ukrainian debt, if not the entire part, is illegitimate. The effects of the policies recommended by the IMF have been disastrous – an extreme impoverishment of the population, so much so, that in 2015 Ukraine was at the bottom of the ladder of all European countries in terms of real wages. The IMF has compounded the insecurity of the labour market by facilitating lay-offs in the private and public sectors. It set newer and newer targets for the reduction of public deficit. The IMF also promoted the rapid privatization of state-owned enterprises.
#November 11 2015 is work cancelled series#
The application of the shock strategy, with typical neoliberal measures: liberalization and promotion of foreign trade, removal of price control of essential commodities, reduction of subsidies of basic items consumed by working people, the deterioration of a whole series of essential services.
The IMF set conditionalities while extending loans to Ukraine. The debt steadily increased from the 1990s to the 2000s. It borrowed from the IMF and the World Bank. It issued debt securities on the international financial markets and also, borrowed from foreign banks. SD: Did the government resort to external borrowing as well?ĮT: Yes, the government resorted to external borrowing. While the oligarchs benefited from all kinds of aid from the state, they lent part of this money to the same state with an interest rate that allowed them to make large profits. The Ukrainian government systematically resorted to borrowing, including from private banks created by the oligarchs. The government financed a large part of the budget with debt because the richest people in Ukraine were hardly taxed, they hardly paid any taxes.
While a number of oligarchs were getting extraordinarily rich, they were supported by members of the government, who allowed them to acquire public property for a pittance. Oligarchs got extraordinarily rich at the expense of state assets just as it happened in the Russian Federation, Belarus, Kazakhstan, Tajikistan, etc. Ukraine did not inherit any debt from the Soviet Union, so it started in a favourable situation, but in the process of a brutal capitalist restoration, the Ukrainian bureaucrats who restored capitalism benefitted at the expense of the state coffers. SD: What is the background of Ukraine’s indebtedness?ĮT: Let me give you a short history of Ukraine’s indebtedness since its independence, a little more than thirty years ago when the Soviet Union collapsed at the end of 1991. And the government issued more than $2-billion in new debt securities, called war bonds. Since the beginning of the Russian invasion, Ukraine’s public debt has increased significantly because the IMF and the World Bank have granted a new credit of $5-billion, and other multilateral financial institutions have also granted emergency credits. And finally, there is Ukraine’s bilateral external debt to China, France, Germany, other EU countries, the United States and a $3-billion debt to Russia. The amounts to be repaid in 2022 for both the external and internal debt are enormous and unsustainable in view of the war situation.
The debt to the World Bank (WB), the European Bank for Reconstruction and Development (EBRD) and finally the European Investment Bank (EIB) amounted to more than $8-billion. In 2021, the debt to the IMF amounted to more than $13-billion. Public external debt in the form of sovereign securities amounted to $20-billion in 2021, all of which (there were 14 issues of securities) are governed by English law and in the event of a dispute, the British courts can be called upon. The government also has an internal debt of over $40-billion. Sushovan Dhar (SD): How much is the Ukrainian public debt and who are the main creditors?Įric Toussaint (ET): Ukraine’s external debt, public and private, is about $130-billion, half of this debt is owed by the government, and the other half by the private sector.