The
situation gets worse each day.
Today, we
see the Hryvnia (UAH) decline to 22 against the USD, and that is the official
bank rate as per the NBU. The black market rate will be approaching 30 to $1.
But dollars and euros are just not available to buy in Ukraine anyhow.
Inflation
will soon be reaching over 30%. Bank lending rates have been increased today to
19.5 %
The country
has only $6.5 billion in foreign currency reserves.
(As I was
writing this the Head of the National Bank of Ukraine Valeriy Gontareva
has just announced the rate will now be 25 to the $1)
Many people thought something would change today, when US
Secretary of State John Kerry visited Ukraine. Although the US will provide much
needed financial assistance, they will not provide any military support. Plus
the latest news is that German Chancellor Merkel and French President Hollande
have also refused to provide any military support.
So what is the future for Ukraine?
The IMF will no doubt provide financial support. So the
future for Ukraine would appear to be a country heavily dependent on
international loans and aid.
The international/multi-national companies already in the
country may well continue to try and survive. Plus a whole range of NGO’s,
quasi autonomous foreign funded organisations and the like will continue to
provide employment to a few. Many local businesses have already gone out of
business and the media in Ukraine are not reporting the true situation in the
economy. (They are not reporting anywhere near enough about what is really
going on). Far too many businesses and entrepreneurs do not have any money to
pay taxes.
The lucky winners are those individuals and businesses who
receive income in the form of foreign currency. Those with contracts for IT
support and software development will be OK. Ukrainians and Foreigners who have
agreed to be paid in USD or EURO will be laughing all the way to the bank. But
inflation will catch up with everyone.
The majority of the people in Ukraine are suffering badly.
Wages are in short supply if payable at all. Many are already in survival mode
and concentrate on providing food for their families on a daily basis.
The economy has only days before it collapses if the IMF does
not provide funding next week.
Therefore, I cannot see the situation improving for many
years. Although I have a business in Ukraine, together with private property,
the time has come for me personally to ‘bring down the curtain’.
This decision was not taken quickly or easily.
Ukrainians are very good people. The great majority are
honest and hardworking and reliable. They deserve better. They deserve to be
part of Europe. They cannot understand
why we from the ‘west’ have failed them. Why have we not provided them with military
support against an aggressive Russian Federation under the control of Vladimir
Putin. Moreover, the great problem of
corruption still hangs like a millstone around everyone’s neck in Ukraine.
Ukrainians are talented people. They are highly skilled in
many professions. During the early part
of 2014 they set an example to the rest of Europe when they decided to
overthrow a corrupt President and his corrupt government. Unfortunately this proved unacceptable to
Vladimir Putin and as we all know led to the invasion and annexation of Crimea
and the continuing invasion into Eastern Ukraine.
I sincerely hope and pray that one day in the not too distant
future the people of Ukraine can live in a peaceful and calm civilised society
aligned to true Western European values.
Gerald Bowers
5 February 2015
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