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Economist Says Kyiv Could Face Default In 2013

Volodymyr Lanovyi
KYIV -- Former Ukrainian Economy Minister Volodymyr Lanovyi says the Ukrainian government faces a real danger that it could default on its foreign loans in 2013.

Speaking to RFE/RL's Ukrainian Service, Lanovyi said the national bank's hard-currency reserves had fallen to $25 billion.

He said some $10 billion of the reserves were spent in 2012 to meet domestic demand for U.S. dollars.

Lanovyi said the country faces total loan payments to private investors, Russia, and international lenders of $9.3 billion in the coming year.

He described the situation as "the verge of financial catastrophe."

He predicted the government will have no choice but to put off some of its debt payments in exchange for accepting higher interest rates.