Default would be embarrassing for the government, but things cannot get much worse for ordinary Ukrainians. By the end of the year they are likely to be a third poorer than when the Soviet Union collapsed. Inflation is 29% and will get much higher thanks to the hryvnia’s slump. To tame inflation and support the currency, interest rates, already 20%, will rise further. That will make it more difficult to repay loans. Added to all that is government austerity, on which the IMF is insisting. By 2017 domestic gas prices will have increased to five times the level of 2013. The government is freezing pensions. With such high inflation, that amounts to a substantial cut. Even if the war stopped tomorrow, there would be a lot more pain to come.
