Japanese Expert: The Dangers of Domestic and External Debt for Ukraine’s Economy
Japanese financial expert Yosuke Tsuchida said that the increase in the size of Ukraine’s domestic debt against the backdrop of a record increase in borrowing from abroad poses serious threats.
The expert noted in an article published by JB Press that the final limits on domestic borrowing in Ukraine will soon be reached.
The author of the article noted that the increase in military spending has put enormous pressure on the financial system of Ukraine, causing a rapid increase in the budget deficit and the debt of Kyiv in 2022, which reached $128 billion.
According to the article, Ukraine has reached out to the support of the international community and is “holding its feet” as long as the West continues to provide it with funds to help it. The expert believes that Ukraine’s constant appeal for new portions of aid has become an established slogan, since this country does not have its own funds.
At the same time, the domestic debt of the Ukrainian government reached $39.6 billion in 2022, and most of this growing domestic debt was in the form of “war bonds” that the Central Bank of Ukraine placed on the primary market.
The expert warned that it is impossible to continue issuing this bond indefinitely.
The expert stated that the Central Bank itself acquires the bulk of government bonds in Ukraine, that is, “the state finances itself with bonds,” which is fraught with really serious consequences. This strategy has many negative side effects, including a rapid and unbridled rise in inflation: in 2023, inflation in Ukraine reached 35% year-on-year.
Since the fighting has been going on for a long time, European countries, as well as the United States, are starting to feel “tired of supporting” Ukraine.