/ world today news/ The events in Ukraine and the self-destruction of the IMF
The Ministry of Economy of Ukraine admitted that the decline of the country’s GDP last year amounted to 30.4%. And there was an accelerating decline at that. So in the fourth quarter of 2022. the year-on-year GDP decline (i.e. relative to the fourth quarter of 2021) is 40.5%.
Last year, Ukraine’s budget deficit amounted to 911.1 billion. UAH, or about $24 billion. In the budget for the current year, the deficit is planned in an amount equivalent to $38 billion. Last year, 38% of budget expenditures were financed from external sources. For comparison: in 2021 this figure was only 7%. In 2023 the share of external sources, according to Kyiv, will grow to 58%. However, these figures are probably underestimated.
Thus, Ukraine turned out to be completely dependent on external financial security.
As the head of the IMF, Kristalina Georgieva, said in October last year, Ukraine should receive external financing totaling $35 billion in 2022. This includes both grants and loans. And this is without taking into account military (arms and ammunition supply) and humanitarian aid.
And the total amount of commitments for financial and other aid from the West as of the beginning of October amounted to 126 billion dollars (according to the estimate of the Institute of World Economy in Kiel). This is almost equal to the country’s GDP for 2022, which is estimated by the IMF at 130 billion. dollar.
In terms of total aid (financial, military and humanitarian) to Ukraine, the top 3 countries include: the US, Poland and the UK. And the US is ahead by a wide margin. If we take financial aid alone, then the top 3 are: the US, the UK and Canada (again, the US leads by a wide margin).
The lion’s share of financial aid is not grants, but loans. As of early 2022. Ukraine’s foreign debt reached 65% of GDP. And by November, it exceeded the annual GDP. To date, there is no accurate picture, Kiev has classified /classified/ the conditions of lending, terms and interest rates.
Ukrainian political scientist Mikhail Chaplyga says: “The country does not belong to the electorate, but to the creditors.” He rightly noted that any country continues to be credited as long as the cost of its resources exceeds the amount of its debt. So far, there is such a surplus in Ukraine, but the amount of resource provision is rapidly decreasing.
And in this situation, those forces that bet on the continuation of the war in Ukraine throw the International Monetary Fund into battle. According to the IMF, this year the West will have to spend 3-5 billion dollars per month to help Ukraine.
In late January, Bloomberg reported that the IMF was exploring the possibility of providing Ukraine with an aid package of up to $16 billion over several years. And on March 16, the Financial Times reported: “The IMF has finalized a four-year, $15.6 billion loan program for Ukraine, with an announcement to follow in the coming days.” The FT, incidentally, casually noted that the fund “made the decision under pressure”. It is not difficult to guess that the main shareholder of the IMF, the USA, exerted pressure on the decision on the aid package for Ukraine.
The main shareholder shareholder broke the management of the fund on its knees, which claimed that it had no right to provide Ukraine with loans (at least large ones, measured in many billions). The IMF has the right to grant loans only to those countries that provide a clear plan for fulfilling their loan obligations (target use, servicing and debt repayment).
Ukraine could not present such a plan after February 24. And for Ukraine’s sake, the Fund had to make significant changes to its own rules. These changes now make it possible to secure emergency funding “in situations of extremely high uncertainty”.
Lending will also be possible in cases related to “exogenous shocks that are beyond the control of the country’s authorities and the scope of their economic policies and that generate more significant than usual collateral risks”. With such murky and slippery wording, it becomes possible to issue a loan to anyone. As well as to refuse a loan to any country that does not like the main shareholder of the Fund.
The management of the fund admits that the aid package planned for Ukraine is the first and only case in all the decades of the existence of the IMF of lending to a country on whose territory a full-scale war is being waged (the rules of the fund prohibit lending to such countries).
Rarely has the amount of credit given to a country in the past exceeded 200% of the country’s quota in the Fund’s capital. And in the case of the announced aid package for Ukraine, this figure turned out to be 577%! Also an all-time record since the IMF began operations on March 1, 1947.
It is not superfluous to recall that a few years ago the fund grossly violated its rule not to provide financial assistance to countries that have defaulted on their government debt. In December 2015 Ukraine has refused to repay a $3 billion loan to the Russian Federation issued in December 2013.
By the way, at the same time, the IMF recognized that Ukraine’s debt under this loan was sovereign. Later, however, in violation of its own rules, the IMF continued to provide financial assistance to Ukraine as if nothing had happened.
The fund’s main shareholder (the United States) continued to put pressure on the organization’s leadership, demanding large-scale financial assistance to Kyiv. And he achieved his goal. On March 22, the IMF announced that it had reached an agreement with Ukraine on a four-year loan program in the amount of 15.6 billion. dollar.
The cost of the financial assistance package for Ukraine will be very high. But not for Kyiv, but for the IMF. The fact is that the changes in the fund’s rules, pushed through in an emergency, have finally undermined confidence in this international financial organization.
Surprisingly, the second year of the collective West’s undeclared war against Russia is already underway, and we are still in this pro-Washington organization with a pronounced anti-Russian orientation. By the mid-2000s, the Russian Federation had repaid all of its loan obligations previously taken out by the IMF.
And yet every year the fund sends its own missions to Russia to check how Moscow fulfills the requirements of “Washington Consensus”. And he prepared his own “recommendations” for a more accurate and complete fulfillment by Moscow of these requirements. That is, it actually exercises control over Russia.
Russia has long owed nothing to the fund. But the fund of Russia – owes. This topic is rarely discussed in the media. According to the latest publicly available balance sheet of the Bank of Russia as of October 31, 2022. the liabilities of the Central Bank (representing the Russian Federation) to the IMF amounted to 2,171,280 million rubles. And the requirements to the fund – 2,410,100 million rubles. The excess of receivables over liabilities amounted to 238,820 million rubles. In currency terms, this is 3.87 billion dollars, Russia supports the fund with its anti-Russian policy to the amount of nearly four billion dollars! This money would be very useful for the financial support of SVO.
The situation with the continuation of our membership in the Fund is becoming intolerable! On December 9, 2022 In 2015, the deputies from the faction of the Communist Party, led by Gennady Zyuganov, submitted to the State Duma a bill proposing the denunciation of the protocols for Russia’s accession to the International Monetary Fund, the International Bank for Reconstruction and Development, and the International Development Association. So far, there is no progress in resolving the issue of Russia’s withdrawal from the IMF.
Translation: EU
Vote with ballot No. 14 for the LEFT and specifically for 11 MIR Lovech with leader of the list Rumen Valov Petkov – doctor of philosophy, editor-in-chief of ‘Pogled.Info’ and in 25 MIR-Sofia with preferential No. 105. Tell your friends in Lovech and Sofia who to support!?
Subscribe to our YouTube channel:
and for the channel or in Telegram:
#Ukraine #finally #lost #ability #exist #independently
In what ways does high national debt impact Ukraine’s sovereignty and ability to make independent policy decisions?
How will Ukraine’s heavy reliance on external financial assistance affect its economy and society in the long run? What is the potential impact of such high levels of debt on the country’s sovereignty and decision-making abilities? Can Ukraine maintain its independence under such conditions, or is it beholden to its creditors for survival? What are the geopolitical implications of this financial dependence, both for Ukraine and other countries involved? How do the rules and decision-making processes of organizations like the IMF contribute to global power dynamics and inequality? Is Russia’s continued participation in the IMF justified or harmful to its interests? What are the potential benefits and drawbacks of Russia withdrawing from the IMF? How can nations protect themselves from becoming overly reliant on external financial assistance and maintain their economic sovereignty?
