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 National Bank Will be Forced to Print Money, Expert Says

Because of the increasing budget deficit which the government is already talking about, the country will have to print the hryvnia which may eventually lead to its collapse, says economist Boris Kushniruk.

Gazeta.ua cites the expert: "The deficiency of funds to the general state budget fund will amount to 30-35 billion hryvnia in 2012. Plus, we have about 6 billion deficiency in the Pension Fund revenues. This, too, will need to be covered from the budget, otherwise the pensions will be delayed. In any case, the government and the National Bank will be forced to print more money," he said.

According to the economist, it will occur according to the well-established scheme: first the National Bank provides loans to banks, they buy the government securities, which are then bought by the National Bank. And for this you need to resort to direct emission.

Kushniruk added that the issue of money emission threatens the devaluation of the currency. The only question is, under what conditions it will happen and how low the hryvnia will fall.

Recently the Cabinet has proposed to increase the budget deficit by UAH 7.678 billion - up to UAH 38.807 billion for repayment of the difference in tariffs for heat energy to the public. At that the margin deficit limit prescribed in the 2012 budget constitutes UAH 31.13 billion.


 
 
 
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