Political instability fuels an economic crisis in Ukraine

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The current political upheaval in Ukraine is having a dire effect on an already weak economy and its hitting incomes hard.

On Wednesday around 100 people picketed the country’s National bank calling for immediate action to safeguard their savings and to control inflation.

Protester Iryna talked to our reporter in Kyiv: “Take buckwheat, for example: it was for six hryvnias, now it’s 14 – the price increased twice, how can we [buy it]? Two months ago, the price was a half less. How can a retired person survive?”

While G7 finance ministers are meeting in Washington on Wednesday to discuss the crisis, Ukraine’s National bank chief Stepan Kubiv, is having to deal with the reality on the streets on the Ukrainian capital:

“It is not our fault that just after things began to stabilise we got the Crimean issue,” he told the protesters outside the National bank. “After that deposits began again to stabilise and last week people started putting their money in the banks but then we got the Luhansk problem.”

But surprisingly some economists such as Dmytro Boyarchuk, are expressing optimism and predicting a turn around soon:

“We expect that by the end of the year the deficit will significantly decrease, it means that the need in foreign currency will not be so strong and it consequently the pressure of hryvnia will disappear,” he said.

That IMF has made the equivalent of a 14 to 18 billion euro loan offer for April and May and the EU is to cut import tariffs on some Ukrainian made goods. But it’s a quick fix for a more long term problem.

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