The restructuring of public debt is positive for the economy, but does not replace the reform

Roman Shpek, senior Advisor of Alfa-Bank UkraineRoman Shpek, senior Advisor of Alfa-Bank Ukraine

Reaching a preliminary agreement with the Special Committee of creditors regarding the restructuring of the external public debt is a very important milestone for macroeconomic stabilization and sustainability of public finances. Securing this agreement will allow to remove stress from the balance of payments and strengthen the build-up of foreign exchange reserves of the National Bank of Ukraine. Held debt operation will improve the image of Ukraine in the international financial markets, bringing a time of renewed private capital inflows to the country.

during the long months of the issue of debt restructuring was quite a significant factor of uncertainty. Turning this page, Ukraine will be able to get rid of the constant speculation regarding the possibility of sovereign default and financial markets will be freed from this negative load. In the current economic situation it is important to dispel the fears of the sub'economic facilities, to bring them faith in the future. Agreement on public debt in this context is the second most important event after the agreement with the IMF On the EFF program for Ukraine.
But in any case, now is not the time to rest on the laurels of a successful debt operation. This agreement is only part of a huge package of health measures in the socio-economic sphere, formulated in the Memorandum of economic and financial policies, and other program documents of the Ukrainian government. Installment debt makes the borrower's rich, it only gives him the opportunity to focus on making money. The key to the economic success of Ukraine will be not the installments and the cancellation of government debt and intensify structural reforms.

Lenders expect us to push forward with reforms. It's not just about the IMF and other donors. The terms of restructuring of external debt of Ukraine provide that creditors can recover some charged 20% of the face value of debt in that case, if our country will go to sustainable economic growth. That is, the restructuring of the debt, in fact, is investment of foreign private capital in the development of Ukraine.

But reforms are needed, not primarily to the creditors, and the Ukraine. The delay in debt repayment and replenishment of reserves will not lead to good results if the value due to this time is not to be used for qualitative changes. These changes will give the opportunity to repay debts without compromising the welfare of Ukrainians. Counting saved a billion today is not significant, as the provision of opportunities for economic growth by tens of billions in the future.

Amount of problems, threats, challenges and temptations facing the country, big as ever. And now just is not the time for “dizziness”. Otherwise in several years Ukraine will once again be faced with an overwhelming burden of debt Zobov'commitments. In this case, lenders may not give us another chance.

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