UPDATE 1-IMF says Ukraine needs modified bailout if it loses the east

[bemildred]

Source: Reuters

May 1 (Reuters) - Ukraine's loss of its territory in the east would force the International Monetary Fund to re-design its $17 billion bailout of the country, and would require additional financing, the Fund warned on Thursday.

The IMF also said a deterioration in relations between Ukraine and Russia, which buys a quarter of Kiev's exports, could further hurt Ukraine's economy and also force an adjustment to its bailout, approved by the IMF board on Wednesday.

"A long-lasting disruption of relations with Russia that depresses exports, investment, and growth, or a loss of economic control over the East that reduces budget revenue would require a significant recalibration of the program and additional financing, including from Ukraine's bilateral partners," the IMF said in a staff report released on Thursday.

In outlining the risks to the program, the IMF also warned of uncertainty about the Ukraine government's commitment to a wide program of reforms, many of them politically unpopular, especially after presidential elections on May 25.

Read more: http://www.reuters.com/article/2014/05/01/ukraine-crisis-imf-idUSL2N0NN0UZ20140501?rpc=401&

[Jesus Malverde]

1. The industrial east will not be able to be resource extracted..

Now even the IMF is getting cold feet.

Maybe NATO can find some spare change in their budget to bail them out.

[Demeter]

2. Curses! Foiled Again!

[another_liberal]

3. I was wondering when that shoe would fall.

Without the industrial east to loot, how will the international bankers and financiers get their loans repaid, let alone their interest and service charges? Looks like the remaining regions of Ukraine, if they take the West's money, may be under the thumb of the IMF for the next three generations, instead of just the next two.

[laurent]

9. +1. nt

[dipsydoodle]

4. Presumably there would be an offset

by the fact the trade imbalance between imports from the EU to Ukraine being $10 billion more than exports to the EU by Ukraine , in terms of annual value , would become proportionately less.

Anyone who thought / thinks there was anything magnanimous about the offer of the EU trade agreement is a dreamer - its all about the EU increasing its exports.

[Nihil]

5. Surely if there is less of a country left to bail out, the cost should go down?

> Ukraine's loss of its territory in the east ...
> ... and would require additional financing

Hmmm ... if it gets smaller it will need more money?

So, if Ukraine were to shrink small enough, it would thus require
more financing than the combined GDP of the world!

Economists For The Win!




(Yes, I understand that the issue is purely down to the loss of looting opportunities
but just found the concept amusing!)

[bemildred]

6. I did notice that phrase: "additional financing", but I assumed it was meaningless jargon,

since as you point out, it makes no sense, to say "you have fewer assets now, so we need to loan you more money".

[Jeneral2885]

7. It sounds so neoliberal

politics and economics again.

[bemildred]

8. Money gives bankers meaning and purpose in life, they want to get paid back. nt