Why do we need the IMF? Why cooperation with the International Monetary Fund is important for Ukraine?

Why do we need the IMF? Why cooperation with the International Monetary Fund is important for Ukraine?

What is your attitude to the IMF? There are discussions have been held regarding the cooperation of Ukraine with the IMF for many years. The society has no answers on how to conduct economic policy in the country at the same time.

Why do we need the IMF?

Ukraine is a young country with no high-quality political and economic institutions. The IMF helps to effectively correct the mistakes and promotes proper economic growth.

Usually the International Monetary Fund does not help countries with balanced economic policy. Its task is to prevent financial crises, economic collapses and defaults.

It means the ‘green light’ for investors when a country works with the IMF and also receives money from it. Such cooperation means the country pursues a prudent policy, conducts reform and acts on the advice of international experts. This Fund does not give money to hopeless countries which may announce in the future they will not pay and will not return anything to anyone. It is a terrible dream for anyone investor. When the state budget does not have enough money the government can take loans, cost reductions or commissioning of a money machine. The most effective are loans. The IMF give loans wisely. The IMF spend a detailed economic  audit and require reforms. The IMF helps strengthen the economy of the country that needs help. It leads to confidence the country can pay its debts

Why the country need take loans?

The expenses for the social programs such as pensions, education, medicine and subsidies in such countries exceed the budget revenues of the country. Its primarily consist of taxes from citizens and businesses. The difference when costs are greater than profits is called budget deficit. It must be covered in some way. For example a loan. Tgere is almost 100 billion UAH deficit was planned in the budget in 2020. This amount increased to 300 billion UAH through Covid-19 crisis. This hole budget should be covered by loans from the IMF. All states borrow. The larger the GDP the more loans a country can afford. Usually countries take new loans to cover others paying from the budget only on debt service, ie the payment of interest.

Why people criticize the IMF?

The International Monetary Fund provides many benefits to the country cooperates with it. But still its politics is often criticized.

For example certain oligarchic groups are spreading on their media false information the IMF is interfering in the internal affairs of our country in to buy state property for nothing in Ukraine. This is not true. The fund cannot buy businesses and land in its status.

The coperation with Ukraine is very important against the background of the economic crisis, changes in government and head of the National Bank. It created a certain panic in the investment market and many experts recommended selling off Ukraine’s assets. The cooperation with the IMF will not only leave current investors but also to attract new ones to Ukraine.

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