Ukraine’s Euro 2012 spend may be debt strain
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.
Kyiv 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.