Greece has been hogging the headlines, but there’s another major debt crisis in Europe, says Peter Spence in The Sunday Telegraph. The chaos in Ukraine resulting from the Russia-backed insurrection in the east of the country last spring has “rapidly rendered the country’s debt pile unsustainable”. The economy has shrunk by almost 25% in the past three years and will shrink further in 2015. So debt as a proportion of GDP has jumped; it is set to reach 95% of national income this year.
The grim backdrop has wiped over 60% off the dollar value of the currency, the hryvnia, since 2014 began. As much of the debt is denominated in dollars, the burden has started to look unpayable. The slumping currency has also fuelled inflation, which is set to reach almost 50% by the end of the year. Wages have not kept up, so consumption has fallen, weakening the economy further. Creditors are now discussing debt relief.