IMF offers Ukraine bailout as Yulia Tymoshenko enters presidential race

theguardian ^ | 3/27/2014 | Alec Luhn

[PieterCasparzen]

Ukraine's controversial opposition leader, Yulia Tymoshenko, has formally joined the race to become the country's president, on the same day as the huge task facing the new leadership was underscored by a tough IMF aid package that will foist deep austerity on the country.

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Whoever wins the vote on 25 May will face a tough task. The International Monetary Fund on Thursday offered Ukraine a bailout of up to $18bn (£10.9bn) over two years, in return for harsh economic reforms that may well worsen living standards for the already impoverished population. Further IMF aid will be unlocked if austerity measures are passed, including a sharp rise in the cost of energy. In a first vote on Thursday night, parliament approved a law required for the IMF bailout.

In explaining why the the IMF conditions had been accepted, the prime minister, Arseny Yatseniuk, told parliament Ukraine was on the edge of bankruptcy and its economy might shrink by up to 10% this year without austerity measures. With the measures in place, GDP would only contract by 3%, he predicted.

When he started the job last month, Yatseniuk called his government a "kamikaze" administration because of the painful reforms it would undertake. The IMF conditions are sure to further erode political support for Yatseniuk and Tymoshenko, although experts disagree as to how much.

Apart from the rise of up to 50% in the price of gas for consumers, Ukraine's state-controlled natural gas provider announced a 40% gas price increase for local heating companies, starting on 1 July. The government also accepted a flexible exchange rate for its currency, the hryvnia, which has fuelled inflation: an annual inflation rate of 12-14% is predicted.

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[PieterCasparzen]

Crickets...

War and revolution is fun.

Debt not so fun.

[Psalm 144]

I truly pity the poor Ukrainians who just want to get on with their lives.