[The IMF's conditions include an agreement to privatise Ukraine's famously rich agricultural land; but not to raise the minimum wage to the level of minimum life cost, not to show a deficit, and not to nationalise the banks. The Ukrainian "Orange Revolution" was one of the Bush Administration's foreign policy "successes." How will an Obama Administration work with Ukraine and Georgia? -jlt]
The USD 16.5 billion bailout package that Ukraine has agreed with the IMF aims to restore some kind of international trust in Ukraine's economy, though Ukrainians themselves may be beyond despair. With the economic crisis world tour paying a visit to central and eastern Europe, Ukraine's banking system found itself on the brink, with overall national debt of USD 100 billion breaking down into USD 15 billion state debt and USD 85 billion private debt.
Quoted in The Observer, Bankwatch's coordinator in Kiev Olexi Pasyuk described the atmosphere in Ukraine before the deal was reached: “There is a certain level of panic. Investors are taking money out, and we urgently need foreign currency. The government is prepared to agree to anything the IMF proposes.”
What the IMF is prescribing is described here but hasn't the debt-based growth agenda, encouraged by IFIs like the EBRD through multiple loans to intermediary banks, played a major role in landing Ukraine's economy in an ultimately unsustainable position? And shouldn't the IFIs now be making emergency efforts to help turn round Ukraine's chronically inefficient energy use? Ukraine's businesses will be in desperate need of finding some low pain ways to cut costs – projects like this one are hopefully a sign of things to come.
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Monday, November 24, 2008
"IMF's shot in the arm for Ukraine means harsh comedown for the majority," CEE Bankwatch, November 11, 2008.
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