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Tuesday, March 20, 2018

From the people in the Ukraine hide the terms of the new loan of the IMF

Kiev is pleased that he was able to negotiate with the IMF on new loans. Although, it seems that the real reasons for joy a little. First, the amount of the next tranche less the same one as was originally hoped the Ukrainian authorities. But most importantly, the government did not disclose the price that will have to pay residents of the country for new loans.

The leader of the Ukrainian Radical party, Oleg Lyashko demanded from the Prime Minister of Ukraine Vladimir Groisman to publish the text of the “killer” of the Memorandum on cooperation of Ukraine with the IMF.

“I’ve seen these documents and know that the conditions include raising the retirement age, permission to sell the land and strategic sites”

“This morning met with the Prime Minister and again demanded to immediately publish a damning text of the Memorandum, which they signed with the International monetary Fund. I have seen these documents and know that the conditions include raising the retirement age, permission to sell the land and strategic assets”, – he wrote in his Facebook. “These steps will destroy our economy, and we retired to be no, because to 70 years old people will not live”, – he added. According to him, it is necessary to refuse IMF loans.

On the eve of the Minister of Finance of Ukraine Alexander danyluk said that Ukraine agreed on a new Memorandum of economic and financial policies with the IMF, but it will only be published after signing. The Ukrainian Minister confirmed that pension reform is an important part of the agreement with the IMF, however, did not answer the question of whether the Memorandum raising the retirement age.

On the eve of the IMF mission, which studied the situation of the country, finished the job in Kiev. According to its head of Ron van Ruden, Ukraine over the past years managed to achieve significant progress in restoring economic stability. The Memorandum is needed to ensure that the IMF continued to lend to the country. Traditionally, fixed “beacons”, which Kiev should achieve.

Last time, Ukraine has received money from the IMF almost a year ago – in August 2015, but agreed the third and fourth tranches at $ 1.7 billion each IMF was not given. The lending program is being revised for the third time. Now, as Kiev hopes that the IMF will give credit at the end of June – early July. However, if earlier Ukraine expected to receive two tranches of $ 3.4 billion, now we are talking only about one in 1.7 billion dollars.

The Fund the main to Kiev have reduced their costs and started to increase revenues, which over the past two years to do so and failed. The parties had to solve a huge number of painful issues. In other words, the Memorandum laid down the price that the Ukrainian authorities are ready to pay for another $ 1.7 billion of credit money.

“We can only guess until the Memorandum is not published. There will be new “beacons”, new directions. Most likely, I will be talking about the traditional reduction of the budget deficit, the talk about the fight against corruption, the reform of the gas market”, – says the newspaper VIEW CEO of the Ukrainian analytical center Alexander Okhrimenko.

Among the important issues – pension reform. The IMF requires the solution of the problems with the Pension Fund deficit. Apparently, agreed to solve the problem of the pension deficit by raising the retirement age. The representative of the President of Ukraine in Cabinet of Ministers Leszek Balcerowicz believes it was the right decision. Ukraine has the highest percentage of GDP that goes to pensions, which is a consequence of the low retirement age, says Balcerowicz. “However, the author of Polish reforms only sees one side of the coin, and completely ignores the fact that life expectancy in Ukraine is one of the lowest in Europe,” retorted the leader of the Ukrainian choice” Viktor Medvedchuk on his page in Facebook. He recalled that in Ukraine, every fourth just die before retirement. “But “reformers” that don’t stop. There is a requirement of the IMF to raise the retirement age, and the Ukrainian government is ready to implement it,” – concludes Medvedchuk.

As debts rose by Ukrainetoday sensitive issue is privatization of SOEs. In fact, the IMF has traditionally requested from the saving economies total privatization of their enterprises. This requirement was put and Russia in the 90s, and Greece in the 2000’s. Apparently, and from Kiev the Fund also requires not to be greedy and increase the list of state companies slated for privatization. In particular, among the 19 bills that the Parliament should adopt in the next two plenary weeks (that is, quickly, without thinking), there is a bill in which it is proposed to allow privatization of as much as 391 state-owned enterprises in the transport sector and the agricultural sector, including Ukrspirt and Artemsol. That is, the enterprises that previously, the government made the list of strategic for the country and therefore not subject to sale. Another bill permits to privatize a number of enterprises of fuel and energy complex. For a new IMF loan, Kiev is ready to give their important assets.

“Sale of state property for a pittance – that’s the price you have to pay Ukraine for a new SOP to lenders,” says Medvedchuk.

The Minister of economic development and trade of Ukraine Stepan Kubiv believes the adoption of these 19 bills in the short term nothing other than “performance to the end of your homework” before you get in June – July a new tranche from the IMF.

The Memorandum also probably spelled out the reform of the gas market. In terms of increase of tariffs for gas for the population of Kiev did-after all, what would the Fund – rates increased to the so-called market levels and became comparable to the price of imported fuel. Another thing is that economically sound arguments for increase in gas tariff as to the level of 3699 USD, and USD 7188 is still there, said Yuri Korolchuk. “Because the population comes to the Ukrainian gas production (not imported – approx. OPINION). And worth remembering, as the company acknowledged that the company lacks 3500 USD for each thousand cubic meter of gas produced is already taking into account capital investment, financial and operating expenses, rents,” explains the expert.

Another question is related to Naftogaz. The IMF believes that the state spends too much on the support of this monopoly, therefore, the Fund insisted on the separation of Naftogaz in accordance with the energy packages of the EU.

The EC also requires from Kiev to summer to reform the CTA and to save Naftohaz from the function of transit. The Ukrainian authorities promised to do everything to the end of the year. This means that this year the Ukrainian state may even cease to have any relevance to the transit of gas. All of this will be transferred into private foreign hands. Most likely, the control of the Ukrainian GTS will acquire the Europeans. For the Ukrainian budget, it would mean loss of income, which today receives Naftogaz as payment for transit fees. By the end of 2015, Gazprom paid Ukraine for the transit of 2 billion dollars.

Medvedchuk believes that the Ukrainian authorities are ready to pay a high price for IMF loans. He was confident that the Ukrainian authorities were supposed to put citizens on notice about the contents of agreements with the IMF. “Because the consequences of “reform” from the IMF will lay down heavy burden on shoulders of citizens, then they should say its word regarding the terms of cooperation with the Fund,” says the Ukrainian expert.

Meanwhile, Ukraine’s state debt is only growing and has reached 65.2 billion dollars, or 1.71 trillion USD. In UAH debt of the country since the beginning of 2014 had increased by three times, and paying the bill will have not one generation of Ukrainians.

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