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Ukrainian bailout to cost $100 billion — American analyst

September 26, 2014, 10:33 UTC+3 WASHINGTON
Last May, at the time it launched its Ukraine lending programme, the IMF estimated that Ukraine might need around $35 billion in official external support
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© ITAR-TASS/Valery Matytsyn

WASHINGTON, September 26. /ITAR-TASS/. Ukraine needs official foreign assistance in the amount “closer to $100 billion rather than the $55 billion that the IMF is now estimating” to save its economy, American economist Desmond Lachman wrote in his blog on The Hill newspaper website on Wednesday.

The former International Monetary Fund (IMF) executive and now analyst at the American Enterprise Institute says “it is all too likely that the IMF is lowballing Ukraine’s needs in much the same way as it did in its Greek bailout programme.” He says the estimates are growing now the same as in the past. “Last May, at the time it launched its Ukraine lending programme, the IMF estimated that Ukraine might need around $35 billion in official external support. Today, some six months later, it is estimating that Ukraine might need around $55 billion in official external financing.”

Lachman says, “One would have thought that this question would have been the main topic under discussion during [Ukrainian President Petro] Poroshenko’s U.S. visit. If Kiev “might need at least an additional $19 billion of external official support to see it through 2015, the White House has agreed to provide Ukraine around an additional $50 million in assistance. This leaves unanswered the basic question as to from where the remaining $18.95 billion is to be obtained,” the analyst says.

According to him, “This is not to argue that Ukraine’s economy is not worth supporting, especially considering the country’s geopolitical importance to the West. Rather, it is to argue that the U.S. taxpayer deserves a transparent and realistic discussion of how much money supporting Ukraine will in the end cost the official international community.” “In that respect, one has to hope that [U.S.] policymakers do not resort to backdoor financing of Ukraine through the IMF without appropriate legislative approval. This is all the more so the case considering that any further substantial IMF lending to this war-torn country runs the risk of significantly compromising the IMF's balance sheet and undermining its credibility as a condition-based lender,” the analyst says.

Meanwhile, the IMF existing programme for Ukraine is estimated at some $17 billion for the next two years. IMF Communications Director Gerry Rice told reporters at a briefing on Thursday that Kiev had not officially asked for this programmes revision, although it is the key part of the international assistance package on the tentative amounts of which Lachman commented.

The Hill newspaper is written for and about the U.S. Congress, with a special focus on business and lobbying, political campaigns and other events on Capitol Hill. The newspaper features investigative reporting, profiles of lawmakers and aides, features describing the sociology and politics of the Hill.

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