The International Monetary Fund has announced a $14-16 billion bail out for cash-strapped Ukraine.
Will that be enough?
Ukraine switched from two year to single year reporting for tax purposes last year and I understand that, as a result, this year’s tax take is going to be much lower than usual, as companies and businesspeople have done their best to minimise tax exposure.
I was told last December, during a visit to Kiev, that this, alone, would leave Ukraine with a $30 billion hole in its public finances.
Cynically, one could say that now Crimea is ‘gone’ there will be some savings to the exchequer there, but nonetheless the current government has very little time to put into place policies that will keep the public on its side before really serious fiscal problems cause further trouble in a deeply unstable situation.
Ukrainians became disaffected with a ‘liberal’ regime after the Orange Revolution of 2004 for largely economic reasons (and public disquiet over corruption) and voted in Yanukovych and his cronies – who were even more corrupt.
They could make the same mistake again as the current government will get a lot of flak for problems that they have inherited…