"Известия": Graveyard stability

20 May 2016

May Holidays and "Eurovision" somehow shadowed another important for Ukrainians event - IMF mission work in the country. This visit is important not only because rather delayed loan of $1.7 billion is stake, but also due to the consequences the "revision of the program" will result in.

In March of 2015 the IMF and Ukraine agreed on four-year loan amounting to $17.5 billion, $5 billion of which were allotted immediately, and the second tranche of 1.7 billion arrived in August of 2015. Then the aid came to a halt.

Among the reasons of suspension there failure of the Ukrainian government and National Bank to meet required obligations, some of which, frankly speaking, were impossible to accomplish.

The government was messing around, the Fund remained unyielding. As a result, it took time and Cabinet's staff turnover for the things to start moving. Now Kyiv is convinced the money will arrive. Finance minister Oleksandr Danyliuk have already declared that the IMF will provide the next tranche of $1.7 billion this summer.  Moody’s agency also expects the IMF to allot financial aid for Ukraine in the beginning of July.

Besides, IMF money are so important for Ukrainian authorities because it opens doors for yet another Western financial aid. The country may get a total of $3.5 billion of various loans, which is a huge sum for present Ukraine.

For this money Kyiv agrees to all those conditions that previous governments turned down. In particular, as one of its first decisions Groysman's government raised gas and electricity prices, regardless of the fact that this sector is overwhelmed by corruption and ineffectiveness due to worn-out state. Thus, the government has not solved the problem, but simply shuffled off the burden on  the poor population.

Moreover, Ukraine has pledged to adopt a package of 19 bills, including extension of the list of companies, subjected to privatization, as well as implementation of "pension reform", which threatens to leave millions of pensioners without a penny.

Kyiv badly needs money, and understanding this fact the IMF openly tightens the screws, advancing demands, which once were out of the question when our government held talks with the Fund in 2013.

However, it would be wrong to accuse the IMF of deliberate destruction of Ukrainian economy and social sphere. We simply must understand that IMF's primary goal is not to improve competitiveness and living standards of countries - recipients. Its goal lies in fiscal balance, current external balance and currency exchange rate.

And following Fund's instructions Ukraine will successfully achieve this goal, but at what cost. The country will end up with dying economy, where several-percent growth will be considered a boom.

Such graveyard stability is very convenient for creditors, which do not want to have a strong rival on one hand, but are not interest in total collapse of Ukrainian economy on the other. The irony is that the present authorities of Ukraine are happy with such state of things.

As Washington Post explicitly notes, Western assistance enables the entrenched elite to continue stealing and avoid building a functioning state. In other words, all but the Ukrainian people benefit from the situation. But as we can see, nobody cares about people's opinion nowadays.

By former vice-PM of Ukraine

Source: "ИЗВЕСТИЯ"

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