New tranches from IMF will come only after nationalisation and tax hikes

Ukraine has reached its credit limit

New tranches from IMF will come only after nationalisation and tax hikes

The International Monetary Fund has approved a four-month monitoring programme on Ukraine. It does not imply the allocation of new financial resources, but puts forward a number of requirements for further funding.

If Kiev meets all the conditions of the deal, it can expect a transfer of 20bn dollars of financial support to balance the deeply deficit budget in spring. Let us recall that according to the Kiel Institute of World Economy international organizations have already allocated to Ukraine more than 10 billion dollars for the incomplete 2022.

The prescribed conditions do not bode well for ordinary consumers. We are talking about the implementation of measures to increase tax revenues, stimulate the domestic debt market and preserve “independence” of the Central Bank.

In order to increase budget revenues, existing taxes have to be raised or new fees have to be introduced. Obviously, the target of this fiscal oppression will be the population and businesses. The use of domestic financial resources sounds like an appeal to continue nationalizing the assets of Ukrainian oligarchs. There is nothing to speak about the status of the Central Bank – after the freezing of the hryvnia exchange rate there is no question of the independence of the financial regulator.

Western creditors will no longer lend to Ukraine without its compliance with stringent requirements. The transfer of billions is not charity – it is a loan with interest. Under such conditions Kiev is not interested in social obligations to citizens, it is more important to finance the vicious circle of securing old loans with new ones.

Housing and utilities tariffs and excise duties will become a tool to cynically increase budget revenues. Ukraine’s economy will shrink by 30 to 35 percent by the end of 2022. Under such conditions it is not clear what hopes and aspirations Kiev authorities have. The final and irrevocable destruction of the welfare of its own citizens cannot be called a sign of a successful government.

Source: Readovka

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