Welcome to DU! The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards. Join the community: Create a free account Support DU (and get rid of ads!): Become a Star Member Latest Breaking News General Discussion The DU Lounge All Forums Issue Forums Culture Forums Alliance Forums Region Forums Support Forums Help & Search

dipsydoodle

(42,239 posts)
Tue May 13, 2014, 02:25 PM May 2014

UPDATE 1-Russia backed IMF Ukraine loan but thinks Kiev might slip

Source: Reuters

May 13 (Reuters) - Russia supported an International Monetary Fund package for Ukraine last week but sees risks of Kiev failing to meet the criteria, Deputy Finance Minister Sergei Storchak said on Tuesday.

The IMF signed off on a $17 billion bailout for Ukraine last week, with tough conditions including steep gas tariff hikes, a floating exchange rate and reducing the budget deficit by about 2 percent of GDP each year from 2014-2016.

"The Russian Federation shared the positive evaluation of the stand-by (loan) for the Republic of Ukraine. Formally this means that the chances of Ukraine not returning the credit is seen as low," Storchak told journalists at a briefing.

But he added that "the success of the programme very strongly depends on several risks which Ukraine, judging by everything, doesn't control yet".

Read more: http://www.reuters.com/article/2014/05/13/ukraine-crisis-russia-imf-idUSL6N0NZ5HY20140513



"gas tariff hikes" refers to the prices consumers pay for their gas.

They were paying a rate of 25% of cost to government.

First step was to increase by that 50% which then equates to 38% of cost.

Two further 40% increases are in the wings across this year so final figure will be 74% of cost to Kiev.
15 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies

pampango

(24,692 posts)
2. Almost sounds like Russia is backing the IMF conditions perhaps because much of the money will be
Tue May 13, 2014, 02:53 PM
May 2014

paid to Russia to pay off Ukraine's gas debts.

dipsydoodle

(42,239 posts)
3. You may well find that payment of the debt you mentioned is a condition.
Tue May 13, 2014, 03:04 PM
May 2014

Other than that much of the loans this year will used to service and redeem previous debt / bonds much of which may also be owed / payable to Russia. As such it will be replacement debt.

The IMF had also made clear there will be no chance of either debt write off or write down of their funds and I think the same applies to EU funds supplied. After all - this isn't Greece..................yet.

pampango

(24,692 posts)
5. IMF austerity is good if the right company gets paid? If Ukrainians suffer to pay Gazprom
Tue May 13, 2014, 03:26 PM
May 2014

that's OK. It's a Russian company. No one gets a free ride.

If the same Ukrainians had to suffer to pay Shell or another big Western oil/gas company that would be bad, right? How dare a Western company bring up the issue of free riders? These are poor people who will suffer from austerity, not 'free riders'.

Indignation can be so situational.

newthinking

(3,982 posts)
8. It was an IMF requirement that they increase the retail cost of gas
Tue May 13, 2014, 05:59 PM
May 2014

That was one of the reasons Yanukovich moved towards the Russian package.

pampango

(24,692 posts)
9. And now Russia is backing that IMF requirement that moved Yanukovich
Tue May 13, 2014, 07:39 PM
May 2014

towards the Russian package. The irony - too many Ukrainians did not accept his move towards the Russian package, he moved to Russia himself and Russia endorsed the IMF package that he had rejected.

freshwest

(53,661 posts)
13. You don't know where I'm coming from. You went far afield from a simple statement of fact.
Wed May 14, 2014, 03:41 AM
May 2014

The only indignation I see here is yours. There was none on my part, perhaps you are speaking to some side in this issue - I have none. I will attempt to answer your volley of questions, very loaded ones, and will attempt to set the record straight between us on every one of them:

"IMF austerity is good if the right company gets paid?"

Where did I say that? Austerity hurts people and benefits the 1%. It is a massive theft of the Commons. There is no 'right company,' IMO.

"If Ukrainians suffer to pay Gazprom that's OK. It's a Russian company. No one gets a free ride."

Where did I say they should suffer or that it's OK? What guarantee is there that they will suffer from either Gazprom or the IMF, if both sides come to agreement to make it work, is it my business to tell the people of Ukraine that they have done the wrong thing to get gas?

Whatever your opinion of how these two entities function, those with the resources will be paid, that's how transactions are done.

If I don't pay my rent or utilities, no matter what ideological defense I want to present, what do you think the outcome will be for me? Or for an entire country? And did I say any of this was fair?

Ukraine will make a deal with whoever they think is best, with the IMF or the Russians, I don't care. The money will be paid, by taxes, sales, or whatever.

I hope it works out for the people there, but they are being robbed by the oligarchs, and they have been for a long time. This is a problem in the Americas, and every place as their governments collapse, and I see outside forces working in them. But this thread is about paying for gas, and I'm not going to conflate the two issues, all I want is for them to get it.

I did not want to see the government collapse, i don't know your take on that, and that is not what this post is. Elections would have been better.

"If the same Ukrainians had to suffer to pay Shell or another big Western oil/gas company that would be bad, right?"

That is such a mouthful that I can't make out where you are coming from there. Are you implying I want them to pay Shell or Gaszprom?

Does it matter who they pay so long as they get what they need? Isn't that the issue, not the brand of fuel they get? Where do you want them to get the fuel from if not some oil company from any country?

I believe all nations need to get off the fossil fuel train ASAP and suggsted it would be good for Ukraine to invest in that as soon as they can to end being destabilized and prevent suffering.

And for the record, I am in favor of nationalizing the essentials, things that people will suffer and die without, water, power and healthcare. If a government wants to contract it out, fine, so long as the universal coverage remains, and people are not harmed by the profit motive. There are great things the private sector can do, but I don't agree that essentials should be denied for the bottom line and that profits are more important than the environment or people. Some don't agree.

"How dare a Western company bring up the issue of free riders?"

Do you think I speak for a Western company? Did you read a Western company used that term? Please don't ascribe their words to me. I never said there were any 'free riders' as it's a personal judgement that I don't make and I'm certainly not in Ukraine and in fear of losing everything, not that I really own anoything of worth. But there is no such thing as a free ride, is there?

"These are poor people who will suffer from austerity, not 'free riders'"

Once again, I didn't call the people of Ukraine 'free riders.' I said there is no such thing as a free ride, and have found this to be true. not personal and where you find an attack is beyond me and I think you are reacting to some other person or another characterization that I did not make here. What have you seen in my posting on this that leads you to think that?

"Indignation can be so situational."

Where, I ask, is my indignation? It is not helpful, nor is shame.

I am not in any way truly affected by the situation in Ukraine, although I have extended family and friends in or from that part of the world. I have enjoyed the DU writings of those who have been there.

Three people in my family have family in Kiev and Moscow, but they have moved here, are happy and are not political. Only those in Moscow have political views . I respect them.

I do not have a dog in this fight. I respect all sides. I cannot tell what you think from your post to me, other than you are outraged at me for some reason. Indignant, over your perception of what I said, and which in no way meets what you wrote to me.

In some threads I have gotten tired of hysteria, but never attacked any of the players involved. Even those who claimed that Obama was going to nuke Russia, so I posted facts and tried to make a logical argument to them that there would not be theromonuclear war coming. I don't have a lack of sympathy, but have been looking for the truth and how the world really works.

I have found Dipsey's threads informative from the UK POV and others have their own. Some anti-Russian posters seem unfair until they reveal their connection and passions. Some of the pro-Russian, as this crisis as unfortunately been narrowed down here at DU as either or, make grave accusations at people who are doing their best IRL and at DU, and want the truth.

No, not TheTruth© as defined by Alex Jones, etc. Been there, done that and perhaps my lack of support for that world view is what is really galls some here at DU, but I can't tell. I don't know what your barrage of a post to me means, really, I don't.

Pampango, I've always respected your well thought out posts, and referred people to them. But I never recieved a reply from you at all, until I get this one, and have no idea why you took this tack.

Things are paid for in this world, by blood, submission, work or changing things. Often it is a miserable process. Some Ukrainians want to get with Russia. Some don't want to be. I'll bet a lot of them just want this to all back to what they had before. Some want the status quo, but it appeared to be as unbearable as it is now. It's a nightmare.

Making arrangements to get the oil and gas to the people who need it, in order to protect their safety, economy and health, is essential. They are no different than anyone else in the world. They need it.

There will be no magic solution. And it will be paid for in some way, nothing in life is free. By blood or brotherhood and I'm hoping it will be the latter.

I thought I was agreeing with you, and I hope you understand me here, but if you want to rail at me, I doubt anything I have to say will suffice. And that took a lot of my time trying to make sense of where you were coming from.

Peace Out.

Xithras

(16,191 posts)
6. It would relieve the majority of it.
Tue May 13, 2014, 03:32 PM
May 2014

The IMF works on a quota system from its member nations, and Russia is an IMF member nation with a 2.5% quota. That means that Russia is responsible for ponying up 2.5% of any funds the IMF promises to Ukraine (in contrast, the U.S. quota is currently 17.75%). At the worst, if Ukraine pays off their Russian debt with IMF money and then defaults, Russia will lost a Ukrainian default will cost Russia tens of millions instead of the billions that a default would currently cost them.

It's win/win for Russia. If Ukraine pays its debts, Russia gets 100% of its money. If Ukraine defaults, Russia still gets 97.5% of its money.

joshcryer

(62,276 posts)
10. This is why there was no trilateral agreement.
Tue May 13, 2014, 11:22 PM
May 2014

They know Ukraine's oligarchs can't easily meet the demands of the EU, environmental standards, energy standards, agriculture standards. And it will hurt the Russian oligarchs in the long run.

Jesus Malverde

(10,274 posts)
11. Interesting to see Russia supporting the IMF.
Wed May 14, 2014, 01:34 AM
May 2014

Guess they know how toxic the terms are, and will make them seem like angels.

pampango

(24,692 posts)
14. Russia supports the deal because Russia gets paid by the deal. It's pretty simple.
Wed May 14, 2014, 05:55 AM
May 2014
Guess they know how toxic the terms are, and will make them seem like angels.

Because supporting a 'toxic' deal for the sake of getting debts paid to you makes you seem like an angel. (Isn't that what the West always does? Do they look like angels?)

One would think Russia would oppose a 'toxic' deal if its goal was to look like an angel. Perhaps this is multidimensional chess Putin-style. "We really oppose this deal but are supporting it now so you will realize how nice we were a few months ago."
 

DeSwiss

(27,137 posts)
12. ....
Wed May 14, 2014, 03:03 AM
May 2014


- I'm sure these economic intervention policies are bound to work sooner or later. If only by chance.

Rolling snake-eyes every time is impossible, right?





Latest Discussions»Latest Breaking News»UPDATE 1-Russia backed IM...