IMF agrees $14-18 billion bailout for Ukraine

[dipsydoodle]

Source: Reuters

(Reuters) - The International Monetary Fund said on Thursday it had agreed a $14 billion (£8.44 billion) -18 billion (£10.86 billion) bailout for Ukraine, a deal that will unlock further credits to reach a total of $27 billion over the next two years.

The agreement is intended to help Ukraine meet debt payments looming this year after months of anti-government protests which resulted in the overthrow of President Viktor Yanukovich and a standoff with Moscow in which Russia annexed the Crimea region.

"The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform programme that can be supported by a two-year Stand-By Arrangement (SBA) with the IMF," the IMF said in a statement.

"The financial support from the broader international community that the programme will unlock amounts to $27 billion over the next two years. Of this, assistance from the IMF will range between $14-18 billion, with the precise amount to be determined once all bilateral and multilateral support is accounted for."

The agreement is subject to approval by IMF Management and the Executive Board, which will consider it in April.

Read more: http://uk.reuters.com/article/2014/03/27/uk-ukraine-crisis-imf-idUKBREA2Q0JA20140327

[BelgianMadCow]

1. "The agreement is intended to help Ukraine meet debt payments looming this year"

with the focus on THIS YEAR. And the "aid" goes to debt repayments whilst the people get to pay 50% higher gas prices. Same old, same old.

You didn't answer my question about the EU, dipsydoodle? Sorry if I assumed too much - I somehow have in mind you're from the UK.

[another_liberal]

2. Our "technocrat" puppet President of Ukraine has done his duty to the mega-bankers.

"The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform programme."

Now the people of that pitiful country will be left to foot the bill through lay-offs, reduced salaries, and etc. This is going to be Greek-style austerity on steroids!

[ctsnowman]

3. No it's about freedom.

To freeze and starve to death.

[another_liberal]

5. But the bankers will get paid their interest . . .

And that's what it's all about, right?

(sarcasm intended)

[derby378]

10. From the Knights Templar all the way down to Citibank (n/t)

[nyabingi]

4. Exactly!

This is why I think the eastern part of Ukraine is going to make a big push to separate themselves via referendum from the Kiev-controlled part of it, why Russian troops are amassing on the borders, and why the EU and US wanted "Yats" (Nuland's nickname for her handpicked PM) in the position they put him in.

[another_liberal]

6. They picked a guy they knew would do their bidding, no matter what it costs his country.

Very damn little of that IMF money will even stay in Ukraine for more than a day. It will be quickly headed right back to lender nations without the Ukrainian people so much as getting to see what color it is.

[ctsnowman]

8. Yup.

[happyslug]

11. And remember most of the assets of the Ukraine are in the Eastern Ukraine

Thus, the Western Ukraine sees advantages for themselves in allying with the West, the West wants access to the assets located in the Eastern Ukraine, where massive opposition to this package exists (The Russian speaking parts know what the West wants, and they want to keep it).

The language difference can be traced back to Stalin and the Czars, both preferred Russians over other Nationalities and thus favored them over any other nationalities within the Soviet Union (for Stalin) or the Russian Empire (For the Czars). In some ways this was strange for Stalin was a Georgian and the Last Czar family Language was English (The last Czar's letters to his family was in English and that appears to have been the language his family spoke at home in the Kremlin).

Thus Russians is spoken in those areas that either Stalin (and his successors) or the Czars favored. In areas NOT favored by either group of rulers, native speakers hold out. In many ways that is the background of the dispute in the Ukraine, those areas favored by Stalin and his successors (and to a degree the Czars) speak Russia, those areas out of favor speak Ukrainian. Language and Nationality appear on the surface to be the cause of the division in the Ukraine, but once you understand the history, it quickly become seen that those difference reflect the policy of Russianfication that both the Czars and later the Communists embraced.

Before you attack that policy, remember the people in the Eastern Ukraine did NOT author it, they were the victim of it as much as the Ukrainian speakers. The problem today is learning to live with the result in an era where Moscow no longer controls the Ukraine (But has a huge influence in the industrial Eastern and Southern Ukraine).

[JackRiddler]

7. This is not a bailout for Ukraine.

It is to cover payments to Ukraine's creditors.

That is a universe of difference. Ukraine and Ukrainians will not see this money. The banks will. If the bailout wasn't provided, the banks would lose as Ukraine defaults.

As almost always the case with IMF "bailout" stories, the headline and the lede are objectively lies in the basic, factual sense.

[dipsydoodle]

9. For starters as soon as sufficient funds are dispensed

the shift in their debt : GDP ratio will cause the $3 billion lent by Russia, in the form of bond purchases in December, to become immediately repayable.

[DeSwiss]

12. When those unexpected emergencies crop-up.......

...there's always Master/VISA/AmerEx/Discovery Card. When those unexpected wars or coups crop-up, there's always the IMF there to lend a hand.

- The IMF, it's almost like money but better.........

[Bosonic]

13. Ukraine parliament fails in first bid to support law for IMF deal

KIEV (Reuters) - Ukraine's parliament on Thursday failed in a first bid to pass an anti-crisis law approving austerity measures demanded by the International Monetary Fund as part of a $14 billion-18 billion bailout package.

The draft law proposed by the government of Prime Minister Arseny Yatseniuk failed to muster enough votes, but deputies continued discussions to try to find a compromise.

http://mobile.reuters.com/article/topNews/idUSBREA2Q1IN20140327?feedType=RSS&feedName=topNews&rpc=932&utm_source=twitterfeed&utm_medium=twitter

[dipsydoodle]

14. Was unlikely the austerity measures would go down too well

yesterday's announcement of a 50% increase in the price of gas supplies to consumers being just the tip of the iceberg.

As should be the case I would imagine the way each member voted was based on what their own voters would've expected.

They've also got to face up to a predicted inflation level of 12% to 14% this year and devaluation of their currency : http://business.financialpost.com/2014/03/27/imf-throws-ukraine-27-billion-lifeline-as-third-recession-in-6-years-looms/

[Catherina]

15. Happy Yipee Yehey! 50-80% gas increases, pension cuts, wage cuts, Greece-style depression

From your link

"the government said it had agreed to raise the price of gas to the domestic consumer - a long-standing demand by the Fund - by more than 50 per cent from May 1."

This was an unpopular condition for IMF aid that Yanukovich had refused before he was ousted last month.

(Arseny Yatseniuk) said, warning that the price Ukraine will pay for Russian gas supplies was expected to rise by nearly 80 percent from April to $480 per 1,000 cubic metres.

http://uk.reuters.com/article/2014/03/27/uk-ukraine-crisis-imf-idUKBREA2Q0JA20140327

The spending cuts will no doubt come out of government job reductions and wage cuts for remaining government workers. It will also undoubtedly include deep cuts to the pension system affecting all retirees, which some estimate will mean cuts in pensions by up to 50% by 2016. It is possible that the $4.5 to $9 billion in government deficit reduction over the next 1 to 2 years will mean sales tax hikes for consumer households as taxes are cut for businesses, since the IMF statement of March 27 also calls for “measures to facilitate VAT (value added tax) refunds to businesses”.

In its March 27 statement the IMF has not spelled out the required job, wage, and pension cuts specifically. It is clearly waiting for the Ukrainian interim government to inflict those economic wounds on itself and the Ukrainian people, following which the IMF Management and Executive Board will approve the offered deal.

http://jackrasmus.com/2014/03/27/ukraines-imf-deal-means-greece-like-depression/

Related: Who Benefits From Ukraine’s Economic Crisis? (Hint: Not Average Ukrainians)