What is the risk of financial problems in Ukraine spilling over into the rest of Europe?
Pazarbasioglu: Spillover risks run in both directions, including from other European countries into Ukraine. But the risk of contagion stemming from Ukraine cannot be excluded. In particular, foreign banks—mostly from the European Union and Russia—make up about half of the Ukrainian banking system. Many of these banks have been involved in lending in foreign currencies to often unhedged households. In the event of deterioration in economic and financial conditions in Ukraine, the quality of assets would also be affected adversely. This would further affect these banks and have repercussions for their activities in other countries. IMF Survey online: Do you think that Ukraine will get external financing from multilateral institutions or bilateral sources? Pazarbasioglu: We support the authorities’ efforts to get additional external financing, and are hopeful that, now that the first review is almost completed, external sources will be accessible. We will reassess the adequacy of externa
