Today in the Ukrainian economy there is a number of objective constraints, which allow preventing currency devaluation. This opinion was expressed by Oleg Ustenko, executive director of the International Fund of Blazer.

"We cannot talk about the deep devaluation, as there is a number of objective constraints. The first important constraint that defines the limit of devaluation is our debts," the expert said. According to him, it means currency borrowings both at the state and the Ukrainian private sector. Most of them were made in 2006-2008, when the amount of retail and corporate lending grew by about 70% per year. "If you devalue, the service of debt becomes more expensive as this is an objective limit devaluation," Ustenko is sure.

The expert emphasized that within the five-six years period specified by him commercial banks formed low-quality loan portfolios. "This led to 42% of the so-called NPL (Non-performing loan - problem and potential problem loans. - Ed.) of bad assets in the banking system . Those loans that were massively originated in 2006-2008 were foreign currency loans," Oleg Ustenko says.
According to him, the devaluation will lead to the fact that the legal entities and the people who have taken these loans will not be able to fully discharge their financial obligations. "The cost of servicing these loans increases again, this is also an important constraint for deep devaluation," the expert said.

Another important barrier to hryvnia depreciation is calculations of gas imports. "The lion's share of our imports is energy resource. We pay for energy in U.S. dollars, not UAH," the expert emphasizes. Oleg Ustenko believes that a deep devaluation will limit opportunities of companies and people to pay for gas. Therefore, it is also one of the constraints for the currency devaluation.


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