View Full Version : Ukraine economy: How bad is the mess and can it be fixed?
Ukraine economy: How bad is the mess and can it be fixed? (http://www.bbc.co.uk/news/world-europe-26767864)
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The Ukrainian currency has reached historic lows against this dollar this year
The International Monetary Fund (IMF) has approved a $17.1bn (£10.1bn) bailout for Ukraine to help the country's struggling economy.
The money will be released over two years, with the first instalment of $3.2bn available straight away.
The IMF loan will also unlock further funds worth $15bn from other donors, including the World Bank, EU, Canada and Japan.
Months of turmoil have taken their toll. Interim Prime Minister Arseniy Yatsenyuk warned that the economy would shrink by at least 3% this year - and by as much as 10% without international assistance.
But the price of that help will come in the form of higher energy bills and wage freezes.
So why is the Ukrainian economy in such bad shape? And what is being done to fix it?
What is the state of Ukraine's economy?
In a nutshell: heavily indebted.
Ukraine's new government has said it needs $35bn (£21bn) to pay its bills over the next two years, which the new loans should mostly cover. It owes the Russian gas company Gazprom $1.9bn.
The Ukrainian economy shrank 0.3% in 2013, the IMF estimates. And the months of street protests, when the barricades were up on the streets of the capital, Kiev, will also have had an effect.
The currency, the hryvnia, lost nearly a fifth of its value in February alone. It now stands at 11 to the US dollar, down from eight in January.
The economy is struggling to recover from a recession and has been shaken by capital flight, as worried investors move their money abroad.
Efforts to prop up the hryvnia have also depleted foreign currency reserves.
So there you have it - Ukraine is now a slave to debt from the IMF, World Bank, EU, etc. It was in a much better state before the Maidan revolution. But, they wanted it and now they have it. The Ukrainian economy will take a very long time to improve - even if the problems in the east ceased today. I feel sorry for them.
Drawing-slim
02-06-2015, 02:18 AM
So there you have it - Ukraine is now a slave to debt from the IMF, World Bank, EU, etc. It was in a much better state before the Maidan revolution. But, they wanted it and now they have it. The Ukrainian economy will take a very long time to improve - even if the problems in the east ceased today. I feel sorry for them.blame your little buddy putin for all this mess.
blame your little buddy putin for all this mess.
He had nothing to do with the Maidan revolution. He merely reacted to what was going on. It turned out good for Russia, they got Crimea back. But what is happening in the east of Ukraine is a people's revolt, not of Putin's doing.
Kabul
02-06-2015, 03:16 AM
If they just federalize Ukraine they could solve this problem, give the status of constituent republics (within a Ukrainian federation) to Eastern Ukraine and Western Odessa (For the Russian minority), Budjak (for the Bulgarian, Gaugauz and Moldovan minorities), Carpathia (for the Hungarian and Rusyn minorities), the area centred around Sumsk (for the Belorusian minority) and the area centred around Lviv (for the Polish minority). Maybe Russia will give back Crimea if Ukraine ensures Crimea the right to be a constituent republic, serving as a vehicle for autonomy of the local Russians, Armenians, Germans, and Crimean Tatars. What Ukraine really needs to stay in one piece is great decentralization. At this point in time, Ukraine is a multi-ethnic country and centralized-nationalistic government can only end badly for them.
If they just federalize Ukraine they could solve this problem, give the status of constituent republics (within a Ukrainian federation) to Eastern Ukraine and Western Odessa (For the Russian minority), Budjak (for the Bulgarian, Gaugauz and Moldovan minorities), Carpathia (for the Hungarian and Rusyn minorities), the area centred around Sumsk (for the Belorusian minority) and the area centred around Lviv (for the Polish minority). Maybe Russia will give back Crimea if Ukraine ensures Crimea the right to be a constituent republic, serving as a vehicle for autonomy of the local Russians, Armenians, Germans, and Crimean Tatars. What Ukraine really needs to stay in one piece is great decentralization. At this point in time, Ukraine is a multi-ethnic country and centralized-nationalistic government can only end badly for them.
Russia will never give back Crimea, though. And I mean never.
Kabul
02-06-2015, 03:24 AM
Russia will never give back Crimea, though. And I mean never.
For the sake of playing down tensions, I think Russia and Ukraine should do to Crimea what Austria and Hungary did to Bosnia and Herzegovina: Make it a political condominium under the authority of both countries.
igo112
02-06-2015, 03:26 AM
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Kabul
02-06-2015, 03:29 AM
To federalise ethnic Russians would be to treat symptom instead of disease -- Ukraine is already multilingual for example or at least it was before 2015, but however much one would decentralise it, people further West still seem to maintain bigger agendas against entire East sphere like 90's all over again.
I think federalizing the state is a good alternative to having such a bloody conflict, Ukrainians and Russians are the same peoples and they shouldn't fight one another.
For the sake of playing down tensions, I think Russia and Ukraine should do to Crimea what Austria and Hungary did to Bosnia and Herzegovina: Make it a political condominium under the authority of both countries.
Not gonna happen. Crimea has been Russian for way too long. Plus, it is militarily very strategic. Now with Crimea part of Russia again, they don't have to pay extortionate fees to host the Sevastopol navy port.
Siberyak
02-06-2015, 03:39 AM
The military operations in the east are costing millions per day. So yes I'm sure the gdp is sinking.
Kabul
02-06-2015, 03:47 AM
Not gonna happen. Ukraine has been Russian for way too long. Plus, it is militarily very strategic. Now with Crimea part of Russia again, they don't have to pay extortionate fees to host the Sevastopol navy port.
The annexation of Crimea has improved the human rights of the local non-Ukrainians (Russia gave cultural autonomy to Crimean Germans, Armenians, Tatars and Bulgarians, something Ukraine always refused to offer to them), but the conflict that came with the annexation has helped nobody. A compromise should be reached to stop the war between brothers, like Crimea becomes a political condominium and Ukraine federalizes, or something along those lines, something which doesn't leave Ukraine in shambles and at the same time doesn't make Russia the target of sanctions.
The annexation of Crimea has improved the human rights of the local non-Ukrainians (Russia gave cultural autonomy to Crimean Germans, Armenians, Tatars and Bulgarians, something Ukraine always refused to offer to them), but the conflict that came with the annexation has helped nobody. A compromise should be reached to stop the war between brothers, like Crimea becomes a political condominium and Ukraine federalizes, or something along those lines, something which doesn't leave Ukraine in shambles and at the same time doesn't make Russia the target of sanctions.
Crimea is a done deal. The question is now what will happen to the Donbass area. That is where compromises will have to be reached.
Kabul
02-06-2015, 04:29 AM
Crimea is a done deal. The question is now what will happen to the Donbass area. That is where compromises will have to be reached.
It's not a done deal until bullets stop flying and the world recognizes the borders of the states.
This is my idea for a federal Ukraine (click the image to enlarge it, you will need to do so to be able to read the captions):
http://i61.tinypic.com/2625oax.png
It's not a done deal until bullets stop flying and the world recognizes the borders of the states.
There are no bullets flying in Crimea. It is part of the Russian Federation. Russia will never negotiate on Crimea.
If they just federalize Ukraine they could solve this problem, give the status of constituent republics (within a Ukrainian federation) to Eastern Ukraine and Western Odessa (For the Russian minority), Budjak (for the Bulgarian, Gaugauz and Moldovan minorities), Carpathia (for the Hungarian and Rusyn minorities), the area centred around Sumsk (for the Belorusian minority) and the area centred around Lviv (for the Polish minority). Maybe Russia will give back Crimea if Ukraine ensures Crimea the right to be a constituent republic, serving as a vehicle for autonomy of the local Russians, Armenians, Germans, and Crimean Tatars. What Ukraine really needs to stay in one piece is great decentralization. At this point in time, Ukraine is a multi-ethnic country and centralized-nationalistic government can only end badly for them.
I also think that federalization is the only solution. An other is splitting the country in two (this is still a better option because eastern Ukraine could not interfere with western Ukraine's politics and vice versa). Maybe Crimea could become a third country too.
I believe it will end like this.
To recover economy is harder. After the war they'll have to create a stable politics and fight corruption, then foreign investments will come automatically.
Not gonna happen. Ukraine has been Russian for way too long.
Not western Ukraine.
Not western Ukraine.
I meant Crimea, sorry.
...
Are you sure about this? It may be multilingual in reality, but not according to the law. As far as I'm aware of, at least until 2012, Ukraine as well as the CCCP before the that, did not practically recognize any regional language (unless maybe russian) even though there are tones of foreign speakers. And it dropped the law after the recent invasion.
igo112
02-06-2015, 08:54 AM
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Basil
02-06-2015, 09:37 AM
So why is the Ukrainian economy in such bad shape? And what is being done to fix it?
Ukraine hasn't suddenly become one of the poorest countries of the former Soviet Union. We can see the same trend for all the years of independence. Their GDP per capita (PPP) barely has recently exceeded the level at which it was prior to the dissolution of the USSR and now it's probably going to fall below that line. The Ukrainian economy cannot be easily fixed in the observable future no matter how big the financial help will be. It's in a permanent crisis.
http://upload.wikimedia.org/wikipedia/commons/thumb/9/9a/GDP_PPP_per_capita_CIS.svg/langru-580px-GDP_PPP_per_capita_CIS.svg.png
(yellow - Ukraine)
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