UNIAN reports that the Ministry of Finance of Ukraine has failed to hold an auction selling T-bills scheduled for June 5; that during that auction the investors were offered to buy such bills for hryvnias and dollars for a term of one to three years, and that no one wanted to buy them. This can be explained by the abundance of MFU paper money on the market or by the potential buyer’s lack of hard cash (or saving the money for the rainy day). The Day tried to contact the ministry, in vain, so it is safe to assume that they know what they are doing. First Deputy Finance Minister Anatolii Miarkovsky told media people in what appears to be the ministry’s latest contact with the media that the bonds issued back in 2007 will be “canceled” (repaid?) in June 2012. He refused to comment on Ukraine’s public debt and budget deficit.
The Day asked its experts on finance for comment.
Oleksandr SAVCHENKO, ex-CEO, National Bank of Ukraine, former deputy finance minister:
“The cost of the bonds didn’t satisfy the potential buyers, so no one wanted to buy them. Therefore the cost has to be revised and made attractive to the potential buyer, what with the hryvnia devaluation forecasts and inflation moods. The hryvnia remains at the bottom of the international price list, so the prospective investors changed their attitude accordingly. Under the circumstances, the Ukrainian government should lessen political pressure and go easy on devaluation, then the stakes won’t have to be increased.”
Anton FILIPENKO, president, Ukrainian Association of International Economists:
“Our government has issued too many bonds; the international market is fed up with them. The main problem is the lowering of the microeconomic indices and the lack of cooperation between Ukraine and the IMF. GDP decline and 14 billion dollars worth of trade deficit are among the reasons for potential foreign inland investors holding back their money. Ukraine is expected to receive a fresh impetus in the next half of the year, due to what is promised as bumper harvest by the agro-industrial complex, along with the Euro-2012 soccer events. Be that as it may, the market situation will quiet only if and when Ukraine resumes cooperation with international financial institutions.”
Oleksandr KENDIUKHOV, president, All-Ukrainian Association of Economists:
“There are two reasons behind this situation. There is a serious microeconomic instability, despite the anti-crisis efforts being made by the Ukrainian and US administrations. Under the circumstances, there is the big threat of another crisis wave that will affect Ukraine in the first place. There is the domestic political factor, parliamentary elections that spells domestic political instability. Business people are careful to take all such risks into account, hence their reluctance to buy our bonds. China may well become our major business partner. There is also the possibility of easing the population of its savings, to the tune of 50-60 billion dollars. But people will have to be talked into parting with their money, something easier said than done.”
