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

Photogallery Oxfam: Ebola Could Be 'Disaster of Our Generation'

Meanwhile, Fidel Castro, the former leader of Cuba, says the Caribbean island nation will 'gladly cooperate' with the US in the fight against Ebola in West Africa More

Multimedia Kobani Fighting Sends 400,000 Refugees to Turkey

Refugees receive help from Turkish authorities and individuals, but say much more is needed More

India’s Ruling Nationalist Party Makes Gains in Regional Elections

Bharatiya Janata Party’s huge margin over its rivals puts it on course to form governments in the northern Haryana and western Maharashtra states More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Exclusive: American Joins Kurds' Anti-IS Fighti
X
Zana Omer
October 18, 2014 6:37 PM
The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.
Video

Video Syrian Defector Leaks Shocking Photos of Torture Victims

Shocking photographs purporting to show Syrian torture victims are on display at the U.S. Holocaust Memorial Museum in Washington. The museum says the graphic images are among thousands of photographs recently smuggled out of Syria by a military policeman-turned-defector. As VOA reporter Julie Taboh reports, the museum says the photos provide further evidence of atrocities committed by the government of Syrian President Bashar al-Assad against its own people.
Video

Video Drought-Stricken California Considers Upgrading Water System

A three-year drought in California is causing a water shortage that is being felt on farms and cities throughout the state. As VOA's Mike O’Sullivan reports, water experts, consumers and farmers say California needs to make changes to cope with an uncertain future.
Video

Video TechShop Puts High-tech Dreams Within Reach

Square, a business app and card reader, makes it possible to do credit card transactions through cell phones. But what made Square possible? VOA’s Adrianna Zhang and Enming Liu have the answer.
Video

Video Church for Atheists Goes Global

Atheists, by definition, do not believe in God. So they should have no need of a church. But two years ago, a pair of British stand-up comedians decided to create one. Sanderson Jones and Pippa Evans told the BBC they envisioned “something like church but without God". Their “Sunday Assembly” movement has grown from a single congregation in London to dozens of churches around the world. Reporter Mike Osborne visited with the members of a Sunday Assembly that now meets regularly in Nashville.
Video

Video Robot Locates Unexploded Underwater Mines

Many educators believe that hands-on experience is the best way to learn. Proving that the method works is a project developed by a group of students at the Stevens Institute of Technology, in Hoboken, New Jersey. They rose up to a challenge posted by the U.S. Department of Defense and successfully designed and built an underwater robot for locating submerged unexploded ordnance. VOA’s George Putic reports.
Video

Video Liberia's JFK Hospital Reopens After Temporary Ebola Exposure

JFK Hospital is Liberia’s largest and one of its oldest medical facilities. The hospital had to close temporarily following the deaths of two leading doctors from Ebola. It is now getting back on its feet, with the maternity ward being the first section to reopen. Benno Muchler has more for VOA News from Monrovia.
Video

Video Hong Kong Protests Expose Generation Gap

Most of the tens of thousands of protesters in Hong Kong are students seeking democracy. Idealistic youths say while the older generation worries about the present, they are fighting for the territory's future. VOA's Daniel Schearf reports from Hong Kong.
Video

Video Liberians Living in US Struggle From Afar as Ebola Ravages Homeland

More than 8,000 Liberians live in New York City, more than in any other city outside of Liberia itself. As VOA’s Bernard Shusman reports, with the Ebola virus ravaging their homeland, there is no peace of mind for these New Yorkers.
Video

Video Kurds See War-Ravaged Kobani As Political, Emotional Heartland

Intense fighting is continuing between Islamic State militants -- also known as ISIS or ISIL -- and Kurdish forces around the Syrian town of Kobani, on the Turkish border. The U.S. said it carried out at least nine airstrikes against Islamic State positions Friday. Meanwhile the U.N. has warned that hundreds of civilians would be massacred if the town falls to the militants. Henry Ridgwell looks at the strategic significance of the city.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7798
JPY
USD
106.41
GBP
USD
0.6203
CAD
USD
1.1242
INR
USD
61.430

Rates may not be current.