News / Economy

Ukraine Faces Debt Downgrade as Russia Puts Loan on Hold

Ukraine Faces Debt Downgrade as Russia Puts Loan Payments on Holdi
X
January 31, 2014 1:30 PM
As cities in Ukraine remain in the grip of protest and political crisis, a rating agency has downgraded the country’s sovereign debt. Russia, meanwhile, said it would delay further loan payments to Ukraine until a new government is formed. The crisis is exacerbating existing economic problems, as Henry Ridgwell reports for VOA from Kyiv.
Henry Ridgwell
As cities in Ukraine remain in the grip of protests and political crisis, a rating agency has downgraded the country’s sovereign debt.  Russia, meanwhile, says it will put a loan deal with Ukraine on hold until a new government is formed.  The crisis is exacerbating existing economic problems.

In Independence Square, old war movies stir the spirits of revolution.  On a big screen, Ukrainian insurgent fighters take on Russian forces in World War II.

Protesters draw parallels with their bid to oust their Russian-backed leader.

President Viktor Yanukovych opted to sign a $15 billion loan deal with Moscow last November, instead of a trade deal with Europe - triggering the protests.  Russian President Vladimir Putin this week said it would be wise to delay further loan payments.

“It's rational,” he told government ministers.  “Let's wait for the formation of the new government in Ukraine."

Rating agency Standard and Poor's downgraded Ukraine’s sovereign debt Tuesday - citing “weakened political institutions.” 

Despite the turmoil, the country can weather the storm, argues Oleh Soskin, professor of the National Academy of Management.

“We can’t say that political threats and civil clashes are influencing the economy that much,” he said.  “We can’t say there’s a direct linear relationship between these events - political and civil clashes - and the stability of the economy."

Ukraine’s GDP plunged 15 percent from 2008 to 2009 due to falling demand for steel.  Output remains below the level in 1989 at the breakup of the Soviet Union.

The IMF accuses President Yanukovych of failing to implement economic reforms while increasing state spending.  Opposition lawmaker Lesya Orobets says the Maidan protest has its roots in the failing economy.

“We are in stagnation for years.  We have our GDP falling; we have our salaries staying where they are, so we have had economic regression for years already.  This is one of the reasons why those people [the protesters] stay," said Orobets.

Another reason is corruption.  Ukraine ranks 144th out of 177 countries in Transparency International’s perceptions of corruption index, the worst in Europe.

The government denies accusations of corruption - but it permeates public life, according to economist Oleh Soskin.

“Corruption blossoms in Ukraine.  Everywhere where we have state buildings, state construction or tenders, there is corruption.  Fifty or 60 percent of the cost of anything goes to corruption," he said.

With economic problems mounting, President Yanukovych sees a more prosperous future alongside old ally Russia, but the protesters believe Europe would bring more trade and the rule of law.

These are two different visions of the future, and, as Ukraine teeters on the brink of civil conflict, its economy remains frozen.

You May Like

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Video Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7866
JPY
USD
109.25
GBP
USD
0.6139
CAD
USD
1.1120
INR
USD
61.428

Rates may not be current.