After Kyiv starts printing money, prices in Ukraine will increase by tens of percent. This estimate was given to socialbites.ca by Tatiana Kulikova, an economist. Earlier, Verkhovna Rada deputy Yaroslav Zheleznyak said that the National Bank of Ukraine “printed” an additional 30 billion hryvnia ($814 million) in the week of August 16-23 to close the country’s budget deficit.
“Ukraine is a typical state that is currently in a state of war. All such states cover the budget deficit at the expense of the “printing house”. This is what the United States and Great Britain did during WWII. The same countries and Germany did this during the First World War. All this leads to a tens of percent increase in inflation, according to world experience.”
The economist reminded that there is an example of a world where inflation cannot be controlled in Weimar Germany.
“This is Weimar Germany. During the First World War there was a huge emission. There was a jump of several tens in prices. But to pay off the debt in gold, the country had to open the “printing press” even after the war. A few years later, the old pre-war mark was one to a trillion dollars. replaced by a new one,” he said.
According to him, it is difficult to say whether the inflation in Ukraine will get out of control or everything will be limited to tens of percent.
“Ukraine has large foreign currency debt, but has agreed with creditors about a delay. If debts are to be repaid in the foreseeable future, everything will develop according to the Weimar scenario. Otherwise, everything will be limited to inflation, which is growing by tens of percent,” he said.
Kyiv reported that the Ukrainian budget deficit is about 5-7 billion dollars every month. Since there are no such tax revenues and customs payments, the NBU is actively exporting hryvnia to meet budgetary expenses. According to Zheleznyak, the sale of local government bonds brought “very little.” He noted that only 11.6 billion hryvnia ($315 million) came from foreign aid during the specified period.