Developments in Ukraine IMF and Ukrainian Government Burden People with $17-Billion Loan

Ukraine is said to be bankrupt and the government in Kiev has taken a $17-billion loan from the International Monetary Fund (IMF). Ukraine's creditors include western banks, Russian energy monopoly Gazprom which is owed $2.7 billion, and the IMF itself with $5 billion of the $17-billion loan going to pay previous IMF loans. The loan is conditional on the government subjecting the people to "structural adjustment," a severe program of austerity. This includes tax hikes, freezing of pensions and a more than 50 per cent increase in the price of natural gas, which is used to heat homes. The IMF has indicated that Ukraine is in recession and may need more than the $17 billion, or what it calls "a significant recalibration of the program." According to the IMF, such a recalibration would be precipitated by a loss of control of Eastern and Southern Ukraine. Ukraine's industry is concentrated in the East, primarily in the Donetsk region, which is also where much of the population is mobilized against what they consider an illegitimate neo-fascist regime in Kiev. Loss of the region by Kiev would mean a loss of industrial exports and tax revenue for Ukraine. (TML Weekly No. 19, May 17, 2014)