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World Bank warns IMF terms will eat into consumption, investment in Ukraine

Published time: April 10, 2014 11:54
AFP Photo / Saul Loeb

AFP Photo / Saul Loeb

Loan terms set by the International Monetary Fund (IMF), will cut consumption in Ukraine this year by 8 percent, as well as erode capital investment, the World Bank (WB) has warned.

The increased cost of household gas and district heating “will affect purchasing power and limit the government’s ability to boost capital spending this year. Thus, in 2014, we expect to see a decline in both consumption and fixed investment,” says the WB statement.

“After several years of robust growth, a drop in consumption may be significant this year (over 8%) while decline in fixed investments will not be that substantial due to a low statistical base,” it added.

The World Bank also said the GDP will shrink 3 percent, with inflation jumping to 15 percent in 2014.

Greece got its first international bailout four years ago, and the people have seen their disposable incomes fall by a third, and unemployment soaring to 28 percent – the highest in 33 years. The country’s GDP has shrunk by a quarter over the period.

In March the IMF agreed to grant Ukraine between $14 billion and $18 billion over the next two years, to help the country avoid a default.

The IMF funds usually come with stringent terms, asking for various cuts and economic reforms. In the case of Ukraine, the fund’s requirements include a 50 percent increase in the price of gas for households, as well as a quick pension reform and lower government spending.

On a positive note, quick structural reforms will boost economic growth in Ukraine to 3 percent in 2015, the WB said.

Also, support by foreign lenders usually improves investor confidence and lowers the cost of international borrowing. The first $3 billion tranche may be transferred this spring. Overall support from the broader international community will come to $27 billion over the period.

Comments (14)

 

Mark 11.04.2014 06:17

The whole point of the IMF terms is to make Ukraine struggle so that their things can be taken -- their pension funds, ag land, factories, ships, paychecks, gold, pipelines, mineral rights, ports, etc. -- Anything they have that the Jews that own America want.

It must be nice being the world's reserve currency -- print up some cash simply by moving a decimal point on a computer, lend enough of it to a country so it can't repay you, and then take real assets as payment.

 

Macon Richardson 10.04.2014 21:02

Chris Higgins 10.04.2014 13:32



Poo r Ukrainians stuck in a power struggle between the USA and Russia.

  


I don't notice Russia struggling over anything. What precisely do you think Russia is struggling over. Russia needs a base for it's Black Sea fleet and has it. End of story.

It's the yokels in Kiev and the yokels in Washington who are struggling, morally, intellectually, economically and geo-strategically. Anti-semitic street thugs in Kiev, Anglozionist thugs in Washington. Hicks and hillbillies all. What's next? Teenage ninja turtles? The USA flying saucer fleet from Area 51?

 

Chaz Scholton 10.04.2014 20:59

BTW, I hope most people are aware of the vast amount of money which the US contributes to the IMF. I'm glad that the WB has spoken up about how crazy things are.

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