IMF Listens to Soros
February 11, 2015
Ukraine is all but bankrupt. This comes 10 months after the IMF constructed a $17 billion package for it. The corrupt government was supposed to reform. No one in his right mind really expected this to happen. George Soros pushed for a $50 billion package a few months ago. The IMF listened. It’s now on the verge of a much larger package of $40 billion.
Soros holds out hope for a radical government restructuring. It’s unrealistic. Financial/political interventions are as fruitless and unrealistic as any American military intervention that’s supposed to create a new state and government. Are IMF loan teams equipped to ensure that a new political reality will be born, with IMF loans as the midwife? Will the ownership of Ukraine’s government effectively pass to its international lenders? Will they be able to control the nation’s politics and ensure that the funds are not wasted? Will the new baby be an honest and wise government that produces an economy that can repay the loans? All this in the midst of a war? $20 billion of the IMF loans will be transferred to Ukraine’s creditors so as to avoid bankruptcy. That’s a creditor bailout to banks and other lenders.
Are international loans even a viable way to convert a corrupt government and failed economy into models of enlightened leadership and economic growth? There are many strong criticisms of the IMF from the left. Studies of the IMF’s impact on economic well-being do not find that the loans improve economies, on average. See here and here. IMF loans to Ukraine are clearly dominated by political considerations.
Against Conscription and War