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Ukraine and The IMF: An Uneasy Cooperation

Author

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  • Fyodor I. Kushnirsky

    (Professor, Department of Economics, Temple University, United States, 1301 Cecil B. Moore Ave., Philadelphia, PA 19122,)

Abstract

The paper discusses the role of current political developments in Ukraine, the history of Ukraine-IMF cooperation, the estimation of the effect of IMF financing on Ukraine’s economic growth, and the role of the IMF conditionality in controversial issues of increasing flexibility of the national currency, raising gas and heating tariffs, and implementing broad-based economic and governance reforms. Based on results of the estimation of a modified production function, the hypothesis of a positive effect of IMF credit on Ukraine’s economic growth has been rejected. The analysis of specific requirements attached to a 2014 standby loan, all of which were accepted by the new government of Ukraine, shows that they will drastically reduce standards of living. Moreover, the government will have to perform magic by reducing the state budget deficit, on the one hand, and significantly boosting subsidies to the needy to compensatefor the rising cost of municipal services, on the other hand. The ups and downs in Ukraine-IMF cooperation demonstrate that the Fund’s means of enforcement of conditionality contracts are quite limited.

Suggested Citation

  • Fyodor I. Kushnirsky, 2014. "Ukraine and The IMF: An Uneasy Cooperation," International Journal of Business and Social Research, LAR Center Press, vol. 4(7), pages 120-130, July.
    • Handle: RePEc:lrc:larijb:v:4:y:2014:i:7:p:120-130
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    File URL: http://thejournalofbusiness.org/index.php/site/article/view/572/437
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    References listed on IDEAS

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    1. Mr. John C. Odling-Smee, 2004. "The IMF and Russia in the 1990's," IMF Working Papers 2004/155, International Monetary Fund.
    2. Anders Aslund, 2009. "How Ukraine Became a Market Economy and Democracy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4273, October.
    3. King Banaian, 1999. "The Ukrainian Economy since Independence," Books, Edward Elgar Publishing, number 1676.
    4. Fyodor I Kushnirsky, 2001. "A Modification of the Production Function for Transition Economies Reflecting the Role of Institutional Factors," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 43(1), pages 1-30, April.
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    Cited by:

    1. Panchyshyn, Stepan & Hrabynska, Iryna, 2018. "About Spells And Recidivism Of The Transition Economies’ Participation In Imf Programs," EUREKA: Social and Humanities, Scientific Route OÜ, issue 5, pages 36-46.

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