Skip to main content

View Diary: Putin Throws Down Gauntlet To IMF (9 comments)

Comment Preferences

  •  So is the IMF report inaccurate? (1+ / 0-)
    Recommended by:
    Richard Lyon

    Ukrainian industry has very low productivity and is not particularly competitive despite relatively low salaries. If nothing is done, things will only get worse. As for  fuel subsidies, Ukraine buys natural gas from Russia for $400 and resells it to its own population for $100. It's just not sustainable. IMF recommendation of increasing rates coupled with subsidies makes sense. Ukrainian agriculture is already export-oriented to a significant extent. Food prices there are about the same as in e.g. Poland or US.

    And, of course, president and his buddies steal quite a bit which doesn't help.

    Overall, good analysis. Thanks.

    •  The IMF war of fuel subsidies (4+ / 0-)

      is a global one. Obviously any country that subsidies fuel and food must do so with revenues from another source. That could be sustainable if they have the funds. What happens is that if they don't they have to go looking for debt financing. In a highly volatile political climate such as Ukraine or Egypt a cut to subsidies that people have come to depend on can be like a match in a dry forest.

      Historically the IMF has been able to impose a one size fits all on small nations. The interesting news is that these nations are getting support from other quarters. I don't find the IMF a really independent and objective source of financial analysis.  

      •  Sure, some of their recommendations may (0+ / 0-)

        be wrong and they have their biases but in this case it's obvious that smth is wrong with Ukrainian economy and cash injections are not going to fix that.

      •  Actually, an entity that issues it's own (0+ / 0-)

        currency out of thin air, doesn't need to get the revenues from anywhere other than it's self.

        The only thing they have to worry about in terms of their domestic economy as a closed system (which it's not) is inflation.

        A small country like Ukrain, can be be harmed in the international market if others won't exchange their stuff for their currency.

        But since Ukrain is less reliant on getting dollar reserves to buy oil, thank to Russia, their external situation is pretty good.

        Ukrain would be silly to give up their monetary sovereignty.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site