BY YURIY GORODNICHENKO
APRIL 2, 2015
The International Monetary Fund last month threw what looks like a much-improved financial lifeline to Ukraine—and indeed, the new loan program is welcome help for a desperate need. But a check on the math of one prominent IMF realist suggests that the cost of the overall aid package could be a Ukrainian economic shrinkage this year of an extremely painful 10 percent—much more than the IMF predicts publicly.
On March 11, the IMF approved a $17.5 billion support program for Ukraine, and within 48 hours delivered the first $5 billion tranche. Ukraine’s desperate need for this cash infusion was illustrated by the dramatic reversal in a months’ long shrinkage of the national currency. The hryvnia rose to a value of 21.3 per US dollar, two weeks after having traded at nearly 34 UAH per USD.
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