To Pay Off Gov't Debt, Every Ukrainian Must Pay $1,000 to Foreign Creditors

The total foreign debt of the Ukrainian government amounts to $42.5 billion and the country won't be able to pay off its debts, said Oleksandr Klymenko, the former Minister of Revenue and Duties of Ukraine.

"How much is it, a lot or not? Quite a lot. Every single Ukrainian, including the elderly and children, owes $993 to foreign creditors," Klymenko said on his Facebook account.

"But it's not even the saddest part. The real problem is that our country must pay almost $30 billion over the next four years," the former minister continued.

Ukraine owes the lion's share of its debts (about 80 percent) to US banks, some 6 percent to Russia and 4 percent to the EU and China. The largest private lender to Ukraine is US Investment Company Franklin Resources to which the country owes $6.5 billion, Klymenko said.

The scariest thing for Ukrainians is that the country won't be able to repay its debt. Klymenko said to pay off foreign creditors, a country should normally allocate no more than 20 percent of its export revenues. Last year, the export of goods and services from Ukraine was around $62.2 billion. That means the maximum amount Ukraine could pay off shouldn't exceed $13 billion per year. Considering that the country is going through the civil war, Ukraine simply doesn't have that amount of money in its budget.

This sad state of affairs means only one thing — Ukraine might very well be on the verge of an economic default. The collapse of the entire Ukrainian economy would result in bankruptcy of banks, cut-off from foreign investment and loans. Average Ukrainian citizens will get the worst end of the deal. The default would raise food prices even further up, cut social benefits and crash the hryvnia.