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Next Up On Ths US Taxpayer (IMF) Bailout Trough: Ukraine, Which Wants $20 Billion
With half of Europe broke, and the IMF more than ready to disburse US taxpayer funding with the largesse of Tim Geithner (is $100 billion in increased IMF aid a TurboTax recognized tax deduction?), it is no surprise that the rescue aid recipients are lining up. First up after Greece is the Ukraine, which has announced it is seeking $20 billion from the IMF according to Deputy Prime Minister Serhiy Tigipko. As Business Week reports: “Having a program with the IMF will help us lower the price of future
Eurobonds, because such a program gives investors more confidence,”
Tigipko said. “It will also help sustain economic growth.” Looking at Greek record spreads and CDS levels, we can't help but wonder just how investor confidence is supposed to be buoyed by yet another bail out. And confirming that our own Alice in Wonderland capital markets have gone global, the reason why the Ukraine needs rescue financing is greater than anticipated growth. "Output may grow between 5 percent and 6 percent this year, compared
with an earlier estimate of 3.7 percent, Tigipko said. The acceleration
will be triggered by higher prices for Ukraine’s key exports such as
metals and lower fuel prices, including Russian gas, he said."
More from Business Week:
Ukraine is in talks with undisclosed foreign banks over syndicated loans as the country seeks to borrow $3 billion on foreign markets this year to cover a deficit forecast at 6 percent of gross domestic product, he said.
“Syndicated loans are faster to arrange than bonds, this is why will start with that,” he said. “We are in talks already. There is a demand, banks are interested. All we need is political stability and the will to reform the economy.”
Tigipko said he is “concerned” about the level of the central bank’s foreign currency and gold reserves and expects half the IMF financing will go to replenish the stockpile, with the rest being used to finance the budget deficit. Ukrainian companies have to repay $20 billion of foreign debts falling due this year and “must make every effort” to reschedule them. That will help sustain the level of the reserves, he said.
The government has no plans to reschedule debt falling due in 2010 and 2011, Tigipko said.
“We will repay everything,” he said.
Next year, Ukraine may need to borrow between $4 billion and $4.5 billion abroad, he said. Inflation is expected at “about 9 percent” in 2011 and the deficit won’t exceed 4.5 percent of gross domestic product. The hryvnia may trade at about 8 per dollar, he said.
Yet even in asking for cash, the Ukraine is refusing to follow IMF guidelines on how to run its economy: not the brightest approach when you are begging for help:
The central bank is under pressure from the fund to increase lending
rates to cut inflation, Tigipko said, adding that “higher rates
wouldn’t help much because we don’t have a mechanism of easy
refinancing” by the central bank.
Nonetheless, we are confident that the IMF will promptly comply with this and future bailout requests: after all the dollar needs to be whacked promptly and decisively soon. After all for debt inflation you need either inflation or currency devaluation, and neither seems to be occurring at the speed the Fed needs.
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i wonder how much will the brits need
I know what I want for collateral.
No PIK! Only TD gets that deal with the Cougars... :)
Just when "Cougar" was about to tip as a meme, it appears Tyler dropped the add.
BASTARD! The women who view this site aught to be pissed at him for setting their perceived equality back 60 years.
--Cougar Fan.
Agreed. They've some hot little numbers over there. :)
That gets you a lot of collateral over there...
+1
Think they'd settle for a rental arrangement?
Nothing like news about a bailout to make my day. Bailouts. They're good for America. Thank you Ben. I love your bald head.
Europe closed.
Look for dow +200pts (after all CAT is selling a metric ass tonne of equipment......just not in the US). Heck they may add 3000 jobs this year (after firing 35,000 people last year)
This is the orange revolution we were celebrating a while back. Funny that the money hose was used to drown the Soviet Union is now spraying everything. Who knew :)
"We will repay everything."
ROFLMAO.
Is that #1, #2 or #3 on the "Most frequently told" list?
I believe the chek's in the mail is number 1.
I won't TBTF in your mouth...
...just your wallet!
Translation: Loan us your bad money so we can buy good money.
Moral what-zard?
What I dont understand why any of this is not under the scrutiny of congress? How can a committment of that size be allowed without an up and down congressional vote?
Well, it ought to be, but because the congress is controlled by the same color shirt as is the white house they're simply not - what's the word? - interested in doing to much in the way of scrutinizing.
You can bet that if the red team had one and the blue team the other this (and much, much more) would be an OUTRAGE!!
Yeah, they're all useless - but at least some faux outrage might be helpful at this point.
Could Ukraine and Greece be looking at an IMF deal as a way to (politically) force austerity on their people?
Ukraine and Greek leadership to their people: "Look, it isn't us, the IMF won't let us become socialized like Europe and the USA, so you have to live in poverty, we'd like to extend and pretend but we can't..."
They got early to the soup line. They know the line will be long and there isn't enough for everybody.
i want a bail out and mine will cost only 2 billion usd.....
Too small. Next!
i actually think it is a very bright thing to ask the IMF for money but tell them you won't follow that rules.
what makes you think it's dumb?
and why do you equate the IMF with USA? Wasn't this blog the one that posted that the IMF funding comes from many places and that Japan puts up an equal amount of the funds?
Honestly, as brilliant as it is when it comes to US domestic affairs, when it comes to international affairs, this blog comes off really ignorant and arrogant, kind of like a typical American, you know what you mean?
Where does IMF money come from?
IMF money comes from contributions paid by each member country. The U.S. is the biggest IMF contributor, and therefore, under the IMF's structure, has greater voting strength in IMF decisions than other countries. The biggest IMF donors are the U.S. (18% of the total); Germany (6%), Japan (6%), Britain (5%), France (5%), and Saudi Arabia (3.5%). President Clinton has asked Congress to increase the U.S. contribution to the IMF by about $18 billion - a 50% increase. However, the U.S. wouldn't just deposit this money into the IMF kitty. Instead, the money would remain in the U.S. treasury until the IMF needed it. And the IMF would have to return whatever money it spent, with interest.
http://lpa.igc.org/lpv33/imf.htm
Will the escorts riot in the streets on the mention of any any austerity measures?
It is SO over.
If they keep this up Goldman will convert to a sovereign nation and "bankrupt" themselves to get another handout. And frankly I wouldn't fault them for it.
All we need is political stability and the will to reform the economy.
That is soooooooo easy, should be over by tomorrow, then?