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Confirmed User
Industry Role:
Join Date: Apr 2013
Location: Slovakia
Posts: 482
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Originally Posted by Sexier
Did you do a search on Paul Craig Roberts before copy and paste what he writes?
if not you should, a guy that envisioned the end of the world a few times which never happened cant be given much credit.
Regarding IMF they helped Ireland, Portugal and Greece to avoid bankruptcy.
Ireland is out of IMF as they repaid their loan back
Portugal will be out next June if not mistaken
Only Greece remains because their problems were bigger then their pockets but they are recovering.
IMF is not the best thing for a country to ask for help but sometimes it cant be avoided.
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Aren't you forgetting something?
Ireland, Portugal and Greece = EU and EURO zone members and the people were relatively "wealthy" they had saved money.
Ukraine = No EU, EURO, people are poor.
What will happen in Ukraine -> http://www.thenation.com/article/179...another-greece
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The IMF conditions for Ukraine won?t include any debt relief, and unlike the European Union-IMF bailout for Cyprus, they won?t impose any haircuts on the country?s creditors. Instead, the IMF recipe hinges on cuts to subsidies and social services and a floating exchange rate that will sink purchasing power even further. Kiev has already started to implement all of these measures. According to economists, the result will be growing poverty, reduced social benefits and an extended recession
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Ordinary people will be the undisputed losers in Ukraine, since they?ll pay for the so-called reform program rather than the oligarchs who continue to freely move billions of dollars to offshore tax havens. The biggest winners will be currency speculators; Western banks whose loans will be repaid via austerity measures; and European corporations who will gain access to the country?s markets and cheap Ukrainian labor under an EU association agreement set to be signed in May.
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In the first ?prior action? for the IMF loan, Ukraine?s state-controlled natural gas provider Naftogaz raised its subsidized gas prices for consumers by 50 percent starting May 1. (Gas and heating prices will increase by 120 percent over the next four years, Prime Minister Arseny Yatsenyuk said last week.) According to Kiselyov, even more painful will be the accompanying 40 percent gas price hike for local heating companies. Starting on July 1, this will raise the average cost of heating a standard fifty-square-meter apartment from about 200 hryvnia to 280 hryvnia (from $18 to $25) per month. It?s a significant hit, considering that the average monthly wage in Ukraine is only about 3,150 hryvnia ($275), more than half of which typically goes toward food, Kiselyov said.
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The second step in the austerity program came into effect on Tuesday? a law raising property and excise taxes and cutting social expenditures. The cuts include a 10 percent reduction in pensions for former government employees, decreased benefits for families with newborns and reduced numbers of law enforcement and state prosecutor employees.
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Finally, a budget law signed on Tuesday increases government borrowing, while freezing the minimum wage and cutting the pension fund by 4 percent. In addition, Yatsenyuk said that despite rising prices, the poverty line won?t be increased this year, meaning the numerous social benefits based on that index will also be frozen.
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But the most painful of the IMF demands is a free-floating exchange rate that?s already being implemented, which will contribute to soaring inflation. Estimates continue to be revised: the National Bank of Ukraine is now forecasting inflation of 12 to 16 percent this year, and the Royal Bank of Scotland now predicts the hryvnia will fall to 12.5 on the dollar by the end of the year, after starting at 8.23
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The IMF?s most immediate concern, as former World Bank chief economist and Nobel Prize winner Joseph Stiglitz has said, is making sure Western financial institutions are paid back. European banks reportedly have more than $23 billion in outstanding loans in Ukraine, and US banks have more than $1.5 billion in outstanding loans there.
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Meanwhile, currency speculators will be able to profit from fluctuations in the hryvnia. And multinational corporations stand to benefit from privatization of those state assets that haven?t already been sold off. The IMF statement?s goals of ?attracting new investment? to the energy sector and ?restructuring? of Naftogaz hint at privatization to come, and government officials have dutifully responded with proposals to sell off coal mines and parts of the gas company.
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USD/UAH
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It almost seems unfair to burden a country with so many problems, but while the attention of Ukraine?s government has been focused on thwarting Russian efforts to destabilize the east the economy has continued to deteriorate rapidly. In a desperate effort to head off inflation (which in March alone was over 3%) and protect the value of the Hryvnia, the Ukrainian central bank hiked its main interest rate from 6.5 to 9.5%. As reported by Bloomberg, the central bank also raised its overnight rate on refinancing loans secured with Ukrainian state securities to 14.5 percent from 7.5 percent and its rate on overnight certificates of deposit to 4.5 percent from 1.5 percent.
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The central bank was forced to take such desperate measures because the currency has been in free fall, losing more than 35% of its value against the dollar this year.
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http://www.forbes.com/sites/markadom...ring-collapse/
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But even if the situation in Eastern Ukraine doesn?t entirely spin out of control, the country?s economy has already unraveled to the point that a substantial default is now essentially unavoidable. Moody's MCO -0.41% recently downgraded Ukraine?s sovereign debt from ?extremely speculative? to ?default imminent with little prospect for recovery.?
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http://www.forbes.com/sites/markadom...ng-to-default/
Oh, so called American aid
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In our March 5 post, we argued that the Obama administration linking Ukraine aid to IMF reform was disingenuous and counterproductive. We were right: the legislation failed, congressional Republicans were angered, foreign governments were annoyed, and aid was delayed. All for what? Without IMF reform, Ukraine will still get every penny it would have gotten with IMF reform.
Brazilian IMF executive director Paulo Nogueira Batista told the FT that he had wanted the Fund to approve a small bridging loan to Ukraine quickly, with negotiation of the bigger package coming later under less stress. ?The experience we had in some other programmes ? notably Greece ? is that rushed decisions taken under economic and political pressure can lead to questionable results.? But, he explained, Ukraine?s short-term financing needs were greater than the IMF could have covered with a bridging loan. The U.S. loan guarantees could have covered the difference, but the Obama administration unwisely made them hostage to IMF reform.
The scorecard? No IMF reform; an unnecessarily rushed IMF aid package for Ukraine, but with slower aid dispersal; and ruffled feathers all around. This is an object lesson in how not to conduct economic diplomacy.
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http://blogs.cfr.org/geographics/201...amateur-032814
Hopefully, Russia will invade Ukraine and all shit will be their problem not ours. Ukrainians are fucking freeloaders - http://translate.google.com/translat...tml&edit-text= |