English Blogactiv Posts - EU Blog Platform

By any means 2014 is going to be difficult for Ukraine. An important external factor to be taken into account by governments in many emerging market economies including Ukraine is Federal Reserve policy towards quantitative easing (QE). As soon as QE is stopped, costs of borrowing on international markets for emerging market countries might increase substantially. The most recent experience suggests that probability of this scenario is high and the results are damaging for many.
In this sense actions of Ukrainian government should be oriented on all possible measures which will aim to decrease country’s fiscal deficit. The situation when deficit at a level of around 5.5% of GDP will be financed at 7.5% interest rate will be not repeated as it happened in 2013. The hike in costs of borrowings is highly correlated to credit default swaps (i.e., approximation of the country’s risk). They reached current 950 b.p. from the […]

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