Refused again? About IMF tranche for Ukraine

Refused again? About IMF tranche for Ukraine
Дата: Monday March 20th, 2017

In the literal sense of the word, the “suffered” Memorandum between Ukraine and the International Monetary Fund, the result of which had to be the allocation of 1 billion dollars for our country, apparently will not be signed in the near future. At least this event will be postponed, and for an indefinite period. ProGolovne tried to figure out why so and in general, do we need this tranche? We have collected the opinions of various economists, experts and officials.

Let’s start from  the Prime Minister of Ukraine Vladimir Groysman, who saw a personal challenge to himself in this postponement:

“Again, in order to assess and see what macroeconomic indicators will be in 2017. I stress that this is another challenge for me as prime minister to deal with”.

There are economists who believe that this tranche will not only save our economy, but will only make it worse. For example, the economic expert Vsevolod Stepanyuk stated the following:

“For business these are bad news, for example, it’s written – the abolition of the moratorium on tax inspections of small and medium-sized businesses. This is happening in terms of tightening financial discipline. Tightening of small business taxation – in fact, the government undertakes to abolish simplified taxation for small business. Special point is the Legalization of amber mining.. (..) I strongly doubt, because after reading, the law has been laying in Verkhovna Rada for about 2 years”.

Doctor of Economic Sciences Alexei Plotnikov believes that Ukraine will simply not be able to fulfill the requirements of the IMF. He declared:

“If a moratorium on the introduction of the land market, on the vulgar purchase and sale of land, has been existing in Ukraine for many years then the Ukrainian government had taken an obligation to remove this problem before May.” This is puzzling, because the mass of political forces represented in the Verkhovna Rada, are against the land market. Taking the threat of early parliamentary elections into consideration, I do not think that these political forces will accept significant looses in ratings in order to make the current government pleased and lift the moratorium on the sale of land”.

The Ministry of Finance of Ukraine has hastened, but blamed the failure of the signing of the Memorandum by those political forces that supported the blockade of the ODLO. A statement appeared on their website:

“The postponement of the meeting was caused solely by the need to clarify the calculations of the economic consequences of the measures taken by Ukraine in response to the blockade and the seizure of Ukrainian enterprises on the territories of the Donetsk and Lugansk regions that are not controlled by the government, and also because of the recognition by the Russian side of documents issued in these territories”.

Approximately the same opinion is being held by Viktor Levitsky, head of the Ukrainian Institute for Global Development and Adaptation Strategies, who said:

“The purely internal, at first glance, problems of the transport blockade of the ORDLO acquire a pan-European significance: the readiness of certain forces in Ukraine for the sake of political gain to break the Minsk agreements and make practical steps towards the separation of part of Donbas from the country are evaluated by the civilized world as extremely dangerous trend”.

 

The economist Alexander Okhrimenko has certain doubts about the necessity of the IMF loans, he mentioned in his blog:

“One should not think that the IMF is a charitable organization, it gives loans only on the condition that they will be repaid, so, very often, Ukraine had to take out new loans to pay off old ones, while Ukraine was still executing requirements and instructions from the IMF, which as a rule have only worsen the lives of ordinary Ukrainians. It is not necessary to make complex calculations, it’s simply enough to count the money in your wallet to understand that during the last three years, when the government of Ukraine was taking loans from the IMF and fulfilling its instructions, the standard of living of simple Ukrainians has only fallen. Such events as the collapse of the hryvnia, the collapse of the banking system, the growth of utility tariffs, the “freezing” of salaries and pensions are all “IMF reforms have happened. In this situation, the conclusion arises: why was it necessary to borrow IMF loans which we must return now, and at the same time disorganize the economy of Ukraine “.

But the head of the International Bleyzer Foundation Oleg Ustenko believes the only one, who is guilty is Ukraine:

“No one prevented Ukraine from embarking on a path of sustainable economic growth, for which it was necessary to make reforms. In each individual program in a single country, the IMF always has three blocks of questions that try to help resolve: the first block is monetary policy, the second is the budget policy, and the third is the issues related to structural reforms, and this matrix does not change, it is always the same whether we are talking about Argentina, Greece, Ukraine or any other country. Therefore, the problem, first of all, of the recipient country and the borrowing country is that it does not want to make structural reforms for a number of reasons: because this is an offensive against the interests of political elites, unwillingness to reduce the level of corruption or anything else like this “.

 

 

We’d like to finish with the quote of the vice-president of National bank Oleg Churia who else has declared, that absence of credits of IMF can end with a default:

“Concerning the prospects for the near future, indeed, within three years Ukraine must pay quite large amounts of foreign debts, it is about $ 12.5 billion, if we take it purely mathematically, then without further loans from the IMF, we will not be able to fulfill these obligations. Thus, we will go into default, everyone must understand this”.

Photos were copied from the public sources: facebook.com, uisgda.com, officical websites of NBU and Ministry of Finance of Ukraine