Alexander Okhrimenko

President of the Ukrainian Analytical Center, Ph.D. in Economics, on the economy and business, latest trends and forecasts.

Over the last five years Ukraine’s leadership has been constantly conducting negotiations with the IMF, and this process hasn’t stopped. In many respects exactly the problem with the IMF credit became the main reason of the pause which Ukraine had to take in question of signing of the Association Agreement with the EU. In the process of getting prepared to the signing of the Association Agreement with the EU, EU leaders’ representatives, in particular Stefan Fule, repeatedly promised to favor Ukraine in obtaining the IMF credit. And – with normal conditions: without draconian requirements about reduction of salary and pensions and increase of tariffs for housing and communal services. But as it appeared, it is impossible to trust words of representatives of the EU leaders. All their promises turned out to be simply mere words: the IMF finally offered a credit to Ukraine on those same conditions which it laid down three years ago. With this same success Ukraine could obtain the IMF credit with their draconian conditions already in 2011 without the EU. Why then somebody promises help if he can’t provide it? All this together became the last straw which forced Ukraine’s leadership to take an europause to solve economic problems with Russia, and already afterwards think about the Association with the EU.

Ukraine managed to escape from the difficult economic situation it got in due to the EU leaders. In many respects this happened thanks to the skillful diplomatic game of Ukraine’s leadership when at first Ukraine signed contracts with China, and then started conducting negotiations with Russia already about new gas prices and the removal of economic barriers and barriers for the Ukrainian goods. With the help of “the Chinese card” Ukraine outgamed Russia and forced it to reduce the gas price and buy Ukrainian eurobonds for 15 billion dollars. Thereby, Ukraine actually solved its pressing problems both without the EU and without the IMF credit. It has once again shown that times when Ukraine was compelled to simply follow the directions of the EU have passed. Now, having China and Russia behind its back, Ukraine will dictate its own conditions to the EU to sign the Association Agreement. Thus, the situation has drastically changed over the last months.

Although this doesn’t mean at all that Ukraine will reject cooperation with the EU and the IMF. In fact, Ukraine doesn’t need the IMF money, but it doesn’t want conflicts and is ready to conduct negotiations with all the parties. But at the same time, Ukraine is ready to conduct negotiations with the IMF on equal terms, as it is a common practice in the civilized countries of the world.

The experience of Greece showed that pieces of advice and recommendations of the IMF are senseless and bring only harm to country’s economy. Therefore, if the IMF wants Ukraine to take money from them and in such a way rescue IMF business reputation, the IMF needs to set forward real recommendations and requirements. Like decrease of state budget deficit to 3% over five years or expansion of dollar/hryvnia rate fluctuations to 5% within a year. Such recommendations can in fact be apprehended with understanding by the leadership of Ukraine, and in this case Ukraine will be able to agree to take the credit from the IMF. Otherwise, taking the IMF credit and by that creating problems for the economy and inhabitants of Ukraine is absurd.

In many respects problems which Ukraine had in 2009-2013 became the reason of implementation of senseless and wrong recommendations of the IMF when the credit was taken in this structure. It’s high time to hold the IMF liable for its wrong recommendations and forecasts which created big problems for Greece, Ireland, Spain and actually nearly ruined the EU economy. And now the IMF is trying to make these same mistakes in relation to Ukraine. This can’t be allowed. Economic cooperation has to be aimed at the development of economy of Ukraine, and not at chaos and crash, as it is advised by the IMF representatives.


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