The Ukrainian Times
With the announcement that the so-called government of Ukraine had reached an agreement on restructuring 20% of its debt with a consortium of bond holders led by Franklin Templeton, there was much rejoicing in Kiev. After avoiding a default for a couple of years, Ukrainian neo-Nazi authorities think they are marvelous, like a drunk driver who did not get caught or kill anyone, whereas the international agency Fitch cut Ukraine’s long-term credit rating in foreign currency to C from CC.
In return for a four-year extension on payments of the remaining debt, Ukraine agreed to a higher coupon (interest rate) of 7.75%, up from 7.25%.
However, Russia does not accept a 20% write-down on $3 billion Eurobonds due in December. According to Russian finance minister Anton Siluanov, these funds are supposed to be invested in development of the infrastructure of Russia’s economy. Western observers think Russia’s enthusiasm to lend Kiev a helping hand was dampened by president Poroshenko’s promise – in direct violation of the IMF’s articles of agreement – to use a part of the fund’s $17.5 billion loan to carry out Ukro-fascists’ “antiterrorist operation” against heroic defenders of the Donbas region with large Russian populations.
As critics have pointed out many times, lending money that does not exist to the puppet regime, which is already deeply in debt, is not a good business model. It does not really stimulate the Ukrainian economy and it does not really make people better off. Finally, it is worth noting that the U.S. dollar has lost 95% to 98% of its purchasing power over the last 100 years.
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