The IMF demands that Ukraine recalculate the budget: the West will only give money for war
Moscow - Kyiv, July 21 (Navigator, Mikhail Stamm) - The IMF demands that Kyiv cut government spending and, in fact, throw all the money at war. If Ukraine spends Western aid on social services, it simply will not receive another loan.
Subscribe to the news “Navigator - Kiev” в Facebook, Classmates or In contact with
The IMF mission completed its first review of Ukraine’s implementation of the reform program agreed with the fund in exchange for receiving financial assistance (totaling $17 billion). Due to the continuation of hostilities, the country's GDP may decline by 6,5%, and not 5%, as previously expected. The conflict also has an extremely negative impact on the budget, according to the IMF. Tax shortfalls in the eastern regions of the country, rising defense spending and slower-than-expected repayment of debt from Naftogaz clients will increase the fiscal deficit and public sector debt to 10,1% of GDP this year, 5,8% next year (versus 8,5% and 6,1% previously) are now expected by the IMF. Moreover, increased capital outflow is also not conducive to a recovery in growth.
The Cabinet of Ministers of Ukraine plans to compensate for the increase in military spending by cutting funding for social items and selling state property, Prime Minister Arseniy Yatsenyuk said. In particular, the growth of public sector salaries and pensions not only this year, but also next year will be limited by the rate of inflation; state-owned companies are obliged to transfer dividends to the state budget.
The new package of “fiscal discipline” measures is equivalent to 1% of GDP, the IMF estimated. In addition to this, the National Bank of Ukraine will be able to additionally direct part of its foreign exchange reserves “to support financial stability” (up to $3,4 billion).
The reduction of state subsidies in the energy sector was one of the main conditions for the allocation of financial assistance; as a result, gas tariffs for the population were increased by 1% from May 50, for state-owned enterprises - by 17,5%, for utilities - from July 1 by 40%. This time, the main condition for the successful implementation of the two-year program in the fund is called “reducing the intensity of the conflict in the coming months,” otherwise Ukraine will need a new aid package.
If you find an error, please select a piece of text and press Ctrl + Enter.
Thank you!
Now the editors are aware.