Which Corporations are Benefiting from Ukraine Fiasco?
In a year beginning with the notorious February military coup in Ukraine, also known as the Euromaidan revolution, the Ukrainian economy has come to the brink of default.
It has turned out that a $27 billion bailout, offered by the International Monetary Fund (IMF) and multinational creditors to Kiev, will not be enough to bolster the anemic Ukrainian economy as well. However, new loans, requested by Kiev to keep its economy afloat will only exacerbate the situation, experts say, pointing to the fact that Ukraine, saddled with heavy debts, will not be able to pay them off in the forthcoming decades.
According to IMF chief Christine Lagarde, an expanded emergency package will amount to $40 billion over the four year period and will come via international creditors, including major Western powers, for instance Switzerland and the United States, the World Bank, the European Bank of Reconstruction and Development (EBRD).
The chief of the IMF clarified that the decision was made due to the fact that the Ukrainian regime has already carried out a string of tough economic reforms, particularly increasing gas tariffs for the country’s households to 56 percent, adopting a flexible exchange rate regime, freezing numerous social programs and conducting “governance reforms” of state-owned enterprises.
The Ukrainian government is irresponsibly driving the nation deeper and deeper into a debt trap, analysts say, while the country’s financial and industry sectors are facing tremendous losses unable to facilitate the growth of the state’s economy. More than 50 percent of Ukrainian enterprises are unprofitable: over the last nine months the financial losses of large and medium-sized companies in the country mounted over $14 billion. Ukrainian GDP dropped by 7.5 percent. According to some estimates, Ukraine’s external debt (including the debts of the country’s enterprises) could reach $135.85 billion, with a debt repayment of $58.55 billion in 2015 alone. On the other hand, the internal war, launched by Kiev against the Ukrainian eastern region in 2014 has severely weakened the country’s economy.
| Full Story |