Voices from Russia

Sunday, 25 January 2015

American Expert: The Ukraine Might Fall… Galicia and Novorossiya Might Arise

00 the Ukraine. 1991-2014. 02.09.14


Eric Naiman, a partner at the American investment company Capital Times, thought that a Ukrainian default would presage the final stage of the country’s disintegration. Naiman believed that if negotiations are unsuccessful, Kiev would announce default, then, the West wouldn’t provide it any new financial assistance, saying during a roundtable in Kiev, “Would the Ukraine fall apart if it declared default? Immediately, the various regions would fight over the budget. Well-off areas would say that they don’t want to send money to Kiev. The so-called ‘separatism’ in the East seems a cakewalk compared to what could happen”. Naiman said that there are many risks; the Ukraine may not receive much aid from the West, even under present conditions. For example, if the coalition in the Verkhovnaya Rada collapses, the IMF might suspend its aid to the country. Naiman summed up, “I don’t envy the politicians… the people might hang them up on the lampposts. Unfortunately, the Ukraine might cease to exist as a state. You’d see new states such as Galicia and Novorossiya, which have been only dreams for so long”.

24 January 2015



Saturday, 10 January 2015

Russia Might Require Kiev to Pony Up 3 Billion USD to Pay Off Debt Earlier

empty pockets no money


A Russian government source told us, “The situation emerging in the Ukrainian economy and financial outlook suggests that a number of parameters used to grant the Ukraine a Russian bond issue are now moot. In these circumstances, it’s likely that Russia would demand an early repayment of the 3 billion USD (188.7 billion Roubles. 18.64 billion Renminbi. 189.62 billion INR. 3.54 billion CAD. 3.72 billion AUD. 2.54 billion Euros. 1.98 billion UK Pounds) debt owed us from the Ukraine in the near future”. Earlier, sources familiar with negotiations on economic assistance to the Ukraine said that Russia could offer to defer the repayment of Ukrainian Eurobonds for 3 billion USD from the end of 2015 until at least the end of International Monetary Fund (IMF) programme, which would last several years. Otherwise, international financial institutions might be reluctant to allow the Ukraine to make new loans. As one source familiar with the negotiations between Kiev and the IMF told us, in 2015, the Ukraine has to pay out 6.5 billion USD (408.86 billion Roubles. 40.38 billion Renminbi. 410.84 billion INR. 7.68 billion CAD. 8.04 billion AUD. 5.48 billion Euros. 4.3 billion UK Pounds), of which almost half represents debt to the Russian Federation. Only 1.5 billion USD (94.35 billion Roubles. 9.32 billion Renminbi. 94.81 billion INR. 1.77 billion CAD. 1.86 billion AUD. 1.27 billion Euros. 990 million UK Pounds) of it represents payments to the IMF. It turns out that if financial institutions in Europe and America raise funds for the Ukraine, the lion’s share of such government money from these countries would have to go to Russia to repay earlier loans.

The Ukraine has a serious political crisis that affects its economy and the public sector, in fact, the country is on the verge of default. The authorities want to improve their situation in re foreign borrowing. The IMF started a two-year credit programme for the Ukraine of 17.1 billion USD (1.076 trillion Roubles. 106.24 billion Renminbi. 1.08 trillion INR. 20.22 billion CAD. 21.16 billion AUD. 14.42 billion Euros. 11.3 billion UK Pounds). Of this amount, Kiev received 4.6 billion USD (289.36 billion Roubles. 28.58 billion Renminbi. 290.74 billion INR. 5.44 billion CAD. 5.7 billion AUD. 3.88 billion Euros. 3.04 billion UK Pounds) in 2014; the remaining funds should come in 2015. Kiev also got financial assistance from the World Bank, EBRD, the European Investment Bank, and a number of foreign sources. Overall, in 2014, the Ukraine received financial assistance amounting to about 9 billion USD (566.1 billion Roubles. 55.92 billion Renminbi. 568.86 billion INR. 10.62 billion CAD. 11.16 billion AUD. 7.62 billion Euros. 5.94 billion UK Pounds). In this case, the total national debt in 11 months amounted to 69.3 billion USD (4.36 trillion Roubles. 430.54 billion Renminbi. 4.38 trillion INR. 81.92 billion CAD. 85.74 billion AUD. 58.48 billion Euros. 45.84 billion UK Pounds).

In 2013, Russia decided to invest up to 15 billion USD (943.5 billion Roubles. 93.2 billion Renminbi. 948.1 billion INR. 17.7 billion CAD. 18.6 billion AUD. 12.7 billion Euros. 9.9 billion UK Pounds) in Eurobonds for the Ukraine. Russia sent the initial tranche of 3 billion USD, with a maturity of two years (coupon rate of 5 percent per annum coupon, with payments every six months). However, the Ukraine didn’t receive the remaining 12 billion USD (754.8 billion Roubles. 74.56 billion Renminbi. 758.46 billion INR. 14.16 billion CAD. 14.88 billion AUD. 10.16 billion Euros. 7.92 billion UK Pounds), as the Russian government judged that the change of government in the Ukraine was illegitimate.

10 January 2015

Rossiya Segodnya


Saturday, 11 October 2014

China Surpasses USA as World’s Largest Economy Based On GDP/PPP

00 Vitaly Podvitsky. Championship Title Race for the Biggest Economy in the World. 2014


International Monetary Fund estimates show that China surpassed the USA in terms of GDP based on purchasing power parity (PPP), becoming the largest in the world by this measure. FT reported citing IMF data that in 2014, China had 17.6 trillion USD (711 trillion Roubles. 108 trillion Renminbi. 1.08 quadrillion INR. 19.72 trillion CAD. 20.27 trillion AUD. 13.94 trillion Euros. 10.95 trillion UK Pounds) or 16.48 percent of the world’s PPP-adjusted GDP, while the USA had slightly less, 16.28 percent or $17.4 trillion USD (703 trillion Roubles. 107 trillion Renminbi. 1.07 quadrillion INR. 19.49 trillion CAD. 20.04 trillion AUD. 13.79 trillion Euros. 10.83 trillion UK Pounds). PPP is the best way to compare the size of economies and not using volatile exchange rates, which rarely reflect the true cost of goods and services. Thus, a trillion US dollars (40.4 trillion Roubles. 6.13 trillion Renminbi. 61.3 trillion INR. 1.12 trillion CAD. 1.15 trillion AUD. 792 billion Euros. 622 billion UK Pounds) are worth a lot more in China than in the USA. The IMF forecast stated that, on a PPP-basis, China is overtaking the USA right about now, becoming the world’s biggest economy. The USA has been the global leader since overtaking the UK in 1872. Previously, most economists thought China would pull ahead in 2019. According to IMF estimates, in 2015 the gap between China and the USA will increase to almost a trillion USD… Chinese GDP/PPP will amount to 19.23 trillion USD (777 trillion Roubles. 118 trillion Renminbi. 1.18 quadrillion INR. 21.54 trillion CAD. 22.14 trillion AUD. 15.23 trillion Euros. 11.96 trillion UK Pounds) against 18.286 trillion USD (739 trillion Roubles. 112 trillion Renminbi. 1.12 quadrillion INR. 20.49 trillion CAD. 21.05 trillion AUD. 14.49 trillion Euros. 11.38 trillion UK Pounds) in the USA. However, in terms of nominal GDP, the USA remains the undisputed world leader with 16.8 trillion USD (679 trillion Roubles. 103 trillion Renminbi. 1.03 quadrillion INR. 18.82 trillion CAD. 19.35 trillion AUD. 13.31 trillion Euros. 10.46 trillion UK Pounds) in output, significantly outpacing China with 10.4 trillion USD (421 trillion Roubles. 63.8 trillion Renminbi. 638 trillion INR. 11.65 trillion CAD. 11.98 trillion AUD. 8.24 trillion Euros. 6.47 trillion UK Pounds).

 8 October 2014



Friday, 29 August 2014

Ukrainian Economy Unravelling

00 ukrainian grynia. 23.03.14


The Ukraine is going through a perfect economic storm. Ravaged by civil war, left with no parliament, and led by a self-styled “kamikaze government”, the country is on the verge of a full-fledged economic disaster. Obviously, the Ukrainian economic crisis is self-inflicted, despite the government’s attempts to blame Russia’s allegedly hostile actions and the lack of Western help. According to estimates made by Ukrainian “Prime Minister” Yatsenyuk in April, the Ukraine needs at least 35 billion USD (1.29 trillion Roubles. 216 billion Renminbi. 2.12 trillion INR. 38 billion CAD. 37.4 billion AUD. 26.6 billion Euros. 21.1 billion UK Pounds) to keep the economy afloat until the end of 2014. The total sum of credit obtained so far from the IMF, the EU, and the World Bank is less than five billion USD (184 billion Roubles. 31 billion Renminbi. 303 billion INR. 5.43 billion CAD. 5.35 billion AUD. 3.8 billion Euros. 3 billion UK Pounds). It hasn’t yet received the IMF’s second tranche of a promised 17 billion USD (625 billion Roubles. 105 billion Renminbi. 1.03 trillion INR. 18.5 billion CAD. 18.2 trillion AUD. 12.9 billion Euros. 10.3 billion UK Pounds) loan, despite the fact that it was due in June. Given that the IMF made subsequent tranches contingent upon Kiev’s ability to regain control of Novorossiya, it’s likely that the Ukraine won’t get some or all the remaining tranches.

“President” Poroshenko worsened the situation with his decision to sign an EU Association Treaty, which resulted in a flurry of Russian measures enacted to protect the Russian market from the re-export of European goods through the Ukraine. This locked Ukrainian business out of the Russian market, which was its top export destination; yet, at the same time, it’s unable to penetrate the oversaturated European market in a meaningful way. Kiev received repeated warnings about this scenario, but Poroshenko made the stunningly unwise choice of ignoring Russian concerns and warnings. Now, the economy is suffocating, and faces a serious currency crisis. The Grivna is trading at around 13.89 Grivna/1 USD (having traded at about 8 Grivna/1 USD in the years following the 2008 economic crisis), causing investors to flee. On 22 August, Fitch Ratings downgraded local-currency-denominated Ukrainian debt to its lowest possible level (CCC). According to finance.ua, Yatsenyuk recently stated, “The Ukrainian economy can’t handle an exchange rate higher than 12 Grivna per dollar”. The exchange rate is 15 percent higher than its critical level and shows no signs of returning to previous levels. The central bank can’t use market interventions to prop up the Grivna because it has almost no hard currency left; a significant part of its currency reserves are in illiquid government bonds. The currency is collapsing and this is visible to everyone. Political analyst Mark Sleboda put it best in a scathing tweet:

#Ukraine currency, economy collapsing fast, nothing at all it can do to stop it (apart from begging #Russia)


On top of the currency crisis, there’s an energy crisis brewing. Last week, the government announced its intention to import coal, once considered a staple of the Ukrainian industrial economy, from Australia because its mines in Novorossiya are unusable. It depends on Russian gas and coal from its former eastern regions; now, it has neither. A week ago, the Cabinet outlined a procedure for declaring a state of emergency in the energy sector, so, blackouts are becoming more and more likely. It’ll be a long, cold, and probably dark autumn and winter for Kiev. Judging by its previous actions, the West won’t come to rescue the Ukraine from its economic misery.

28 August 2014

Stanislav Fisher

Rossiya Segodnya


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