Too early to speak of Ukrainian foreign debt restructuring - Bulgaria's ex-finance minister
MOSCOW. June 7 (Interfax) - The current level of instability and uncertainty caused by the ongoing crisis indicates that the possibility of restructuring Ukraine's foreign debt, fully ceasing manual management and reinstating market mechanisms is premature, said former Bulgarian Finance Minister Simeon Djankov, who also has a vast experience of working for the World Bank and the European Bank for Reconstruction and Development.
"It is still too early to speak about [debt] restructuring. The reason is that we do not know what will happen next," Djankov said in an interview with Ukrainian journalists.
As regards the banking sector and the public debt sector, Ukraine entered the crisis with good indicators, he said.
"So, there is an opportunity to wait for some time, for 2-3 months, I, as former finance minister, think, hoping that the situation here will clarify more or less: what to build, where and on what scale. Then it will become possible both to restructure foreign debt and to speak about a return to the market principles of the functioning of both the banking system and the economy. But there is too much instability now," Djankov said.
It is also too early to speak about changes in the tax system, he said.
"First, it is necessary to get through this instability that exists today, and then everything can be organized in a new way," he said.
Djankov, who was given the right to vote in the majority stake of Alfa-Bank Ukraine (Kyiv) in mid-April, also noted that the situation is gradually changing: understanding is emerging with regard to the state of assets owned both by individuals and by the corporate sector.
Djankov positively assessed the work of the country's banking system and regulator since the onset of the crisis. According to Djankov, the National Bank of Ukraine's (NBU) stress tests "are simply to the highest standard" as compared to what he had seen over the past 25 years of work in East Asia, Eastern Europe and Latin America.
"Some market mechanisms may kick in. But, unfortunately, it is impossible to fully drop manual management for now. In conditions of a crisis, it is very difficult to understand in what way one can reorganize both the banking system and the economy. If we knew when the crisis is going to end, we could say for certain which assets have been lost forever because of destruction, which assets should and can be rebuilt, and which assets have not suffered at all. It would be far easier," he said.
Djankov served as Bulgaria's finance minister and deputy prime minister from July 2009 to March 2014. Today, he is policy director of the Financial Markets Group at the London School of Economics and the European Commission's technical advisor. Djankov also has a 19-year work experience at the World Bank and headed the Supervisory Board of the European Bank for Reconstruction and Development.