KIEV: International Monetary Fund (IMF) headquarters in Brussels, IMF Managing Director Christine Lagarde announced that the IMF will extend an approximately $17.5 billion bailout package to shore up Ukraine, which has been ruined by nearly a year of austerity measures and continuous fighting against pro-Russian separatists in the industrial eastern Donbass region.
Lagarde told reporters that the distribution of the loans and demanded reforms would be “a turning point for Ukraine.”
Her announcement came on the same day as the declaration of a new ceasefire deal between Kiev and the separatists in east Ukraine, slated to go into effect.
Lagarde stated that the agreement would “support immediate economic stabilization in Ukraine as well as a set of bold policy reforms aimed at restoring robust growth over the medium term.”
In Orwellian style, she claimed that the agreement was aimed at “improving living standards for the Ukrainian people.”
The response of the economic markets to the announcement of the agreement was largely negative, with the hryvnia falling as much as 3.1 percent against the dollar.
The Ukrainian currency has lost 67 percent of its value against the dollar over the last year, severely impacting living standards and slashing government revenue.
The agreement is a further restructuring of the Ukrainian economy in the favor of Western business interests and away from Russia. Eldar Vakhitov, an economist at Barclays Plc in London, told Bloomberg Business,
“The new program announced today covers the shortfall, though does not go much beyond that. The government in Ukraine may now turn to bondholders to discuss the restructuring of debt.”
The Ukrainian economy, which is in shambles in the aftermath of last year’s US- and EU-backed coup, contracted by more than 7 percent in 2014 and is projected by the World Bank to contract by more than 2 percent in 2015.
According to the State Statistics Service, inflation has risen dramatically from 1.2 percent at the beginning of 2014 to nearly 29 percent last month.
The official unemployment rate stood at 9.9 percent at the end of September last year and is expected to rise to more than 10 percent this year.
The announcement of a new loan agreement is a prelude to the implementation of further shock therapy against the working class in Ukraine.
The distribution of the tranche of loans is predicated on the implementation of deeper austerity measures that will devastate the living standards of the most vulnerable layers of society.
