Default on government bonds in Ukraine unlikely, Naiman says

Ukraine’s default on the bonds of the domestic government loan is unlikely, since the NBU is the main shareholder of domestic securities, economist Eric Naiman wrote this in his blog on Friday.

KYIV, February 21 /Ukrinform/. Ukraine’s default on the bonds of the domestic government loan is unlikely, since the National Bank of Ukraine is the main shareholder of domestic securities, economist Eric Naiman wrote this in his blog on Friday.

"Default on the government bonds is unlikely, since the National Bank copies the behavior of leading central banks and supports the domestic government bond market through their redemption," Naiman says.

According to him, in case of default in Ukraine ordinary people will suffer most. "In default Ukraine will surely seek help from the IMF and will receive it. But in exchange for the increase in gas prices for households, freezing salaries to public officers and a number of other socially unpopular austerity measures," Naiman emphasized.

The expert predicts that the dollar against the hryvnia may rise a little more. The economist calls default in Ukraine a "useful pill", after taking it Ukrainian citizens will see an improvement in the economy in late 2014.

A reminder that S&P has downgraded Ukraine’s credit rating to pre-default level.