As we reported yesterday, the International Monetary Fund (IMF) has approved a 15.5 billion euros bailout for the government of Ukraine.
While Petro Poroshenko was busy meeting with Angela Merkel, Fraçois Hollande and Vladimir Putin in Minsk, the president of the International Monetary Fund, Christine Lagarde, announced the new financial assistance package to Kiev in exchange for what the IMF head called substantial reforms: review of energy policy, cut spending and reduce bureaucracy.
“It’s an ambitious, hard and there are risks involved“, said Lagarde, “but it is also realistic and represents a turning point in Ukraine,” she continued. Lagarde referred to the geopolitical tensions that “affect investor confidence in the country”.
Minutes later, the first Ukrainian Minister Arseny Yatseniuk said the requirements are “very difficult” due to the reforms proposed by the IMF, which he believes will not end with the destabilizing corruption that has taken over the country for years. Lagarde, however, applauded the effort to combat it. Yatseniuk, during an appearance in Kiev along with other officials of the IMF, was disappointed because he said he expected would be of at least 22 billion euros.
Lagarde explained that the IMF’s cash will help provided that Kiev carries out harsh structural-reforms which she sees as attainable because Ukraine finally “has demonstrated its commitment to these adjustments” in key sectors such as strong “fiscal discipline“.
In simple terms, the government of Petro Poroshenko has accepted the harsh conditions imposed by the IMF which were originally rejected by former president Yanukovich, which later cost him his presidency. Yahukovich was removed from power via a US-supported coup d’etat which gave way to Arseny Yatseniuk and now to Petro Poroshenko.
The Ukrainian Executive increased tax revenue by chargin more for cigarrettes, alcohol and imposing taxes on Russian gas, whose price went up from $280 per cubic meter to $480, among other structural measures.
The aid package announced on Thursday also aims to position the IMF in the role of leader in foreign aid to Ukraine. “This item will also be supported by other -bilateral and multilateral funding sources,” said Lagarde.
After Yanukovich was removed from power, Ukraine has been executing a proxy war on behalf of the United States against Russia, on sovereignty grounds after the breakaway of Crimea and the fight betweek Kiev and eastern regions of Lugansk and Donetsk.
The armed conflict has left nearly 6,000 dead, most of them civilians who have been murdered by Kiev’s Army. The leaders of both sides, tucked behind the mediation of the OSCE and the EU, with president Hollande and German Chancellor Angela Merkel to head negotiations with Russia to reach a diplomatic solution to the conflict,
On Thursday leaders from the four nations involved in conflict, agreed to a ceasefire which will enter into force on february 15th.