Ukraine's Euro 2012 spend may be debt strain
Source: Agencies |
May 28, 2012, Monday
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UKRAINE may never recover all of the billions of dollars it has spent to co-host next month's European soccer championship and the outlay might complicate its chances of servicing its debt.
The staging of the month-long Euro 2012 tournament - absorbing US$13.4 billion including US$6.6 billion from state coffers - is unlikely to make the former Soviet republic any more inviting for foreign investment, analysts say.
And despite the hopes of tour operators and the authorities themselves, once the competition - taking place in four Ukrainian cities - is over and the fans have gone home, it is by no means certain that Ukraine will have registered itself as a new European tourist destination.
The mathematics of financing the Euro 2012 championship, being co-hosted with Poland, are crucial for a country which faces US$11.9 billion in debt obligations this year, US$5.3 billion of which is denominated in foreign currencies - making it sensitive to movements on foreign exchange markets.
The issue looms large as in June, the government has to repay a US$2 billion loan to Russia's VTB Capital and US$500 million in outstanding Eurobonds.
Kiev has failed to agree on a new credit line with the International Monetary Fund and has for more than a year been unable to issue Eurobonds to help cover state spending, which has spiked ahead of October's parliamentary election.
Ukraine's high level of corruption has scared off some foreign investors, while skyrocketing hotel prices have made many soccer fans either cut short their stay or skip it altogether and opt to follow their team's fortunes on television.
The staging of the month-long Euro 2012 tournament - absorbing US$13.4 billion including US$6.6 billion from state coffers - is unlikely to make the former Soviet republic any more inviting for foreign investment, analysts say.
And despite the hopes of tour operators and the authorities themselves, once the competition - taking place in four Ukrainian cities - is over and the fans have gone home, it is by no means certain that Ukraine will have registered itself as a new European tourist destination.
The mathematics of financing the Euro 2012 championship, being co-hosted with Poland, are crucial for a country which faces US$11.9 billion in debt obligations this year, US$5.3 billion of which is denominated in foreign currencies - making it sensitive to movements on foreign exchange markets.
The issue looms large as in June, the government has to repay a US$2 billion loan to Russia's VTB Capital and US$500 million in outstanding Eurobonds.
Kiev has failed to agree on a new credit line with the International Monetary Fund and has for more than a year been unable to issue Eurobonds to help cover state spending, which has spiked ahead of October's parliamentary election.
Ukraine's high level of corruption has scared off some foreign investors, while skyrocketing hotel prices have made many soccer fans either cut short their stay or skip it altogether and opt to follow their team's fortunes on television.
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