IMF in Ukraine: The Chain Saw Massacre of the Productive Class

The International Monetary Fund (IMF) - Chain Saw Massacre of the Productive Class in Ukraine in 2014.

The International Monetary Fund (IMF) – Chain Saw Massacre of the Productive Class in Ukraine in 2014.

At the end of 2013, Ukrainian Productive Class, i.e. people with savings and companies, had about 608 billion in Ukrainian currency Hryvna(76 billion USD). IMF and marauding idiots in the Ukrainian government and Central Bank organized a fraudulent devaluation, in which about 43.7bn USD was wiped out.

Between 2008 and 2013, the exchange rate of the Ukrainian Hryvna (UAH) to USD remained at 8 UAH/USD. This exchange rate resulted in a brusque devaluation in 2008 from 4 UAH/USD. The Purchasing Power Parity (PPP) exchange rate remained at around 4 UAH/USD. Notably, it is the implied rate calculated by the Economist in its “Big Mac Index” in January 2014.

Big Mac Index for Ukraine in Jan 2014 - implied exchange rate to USD is 4.11 , actual rate 8.38, UAH undervalued 51%

Big Mac Index for Ukraine in Jan 2014 – implied exchange rate to USD is 4.11 , actual rate 8.38, UAH undervalued 51%

According to the National Bank of Ukraine, the overall volume of money deposits in Ukrainian banks in November 2013 was an equivalent of 648 billion of UAH. This figure includes deposits in Ukrainian currency and in other currencies.
http://www.bank.gov.ua/control/uk/publish/article?art_id=673426

The portion of bank deposits in UAH were at about 40%. This equals 32.4 billion USD. (648/8)*40%=32.4, where 8 is the exchange rate 8UAH/USD.
http://www.bank.gov.ua/doccatalog/document?id=1305098

Besides that, the volume of money in UAH outside the bank system could be estimated by 230 billion UAH (28.75 billion USD).
http://www.bank.gov.ua/control/uk/publish/article?art_id=673420

By combining the two, we obtain the total amount of money kept by the population and businesses in UAH by the end of 2013: 378+230=608 billion UAH (76 billion USD).

Early in 2014, the International Monetary Fund (IMF) reiterated one of his main requirements: Ukraine had to remove a peg of its currency to USD and to introduce “a flexible exchange rate”. The IMF did not take into account the fact that Ukrainian Currency Exchange was an ideal place for speculation and fraud. Without any transparency and with total impunity, corrupted bureaucrats from the National Bank of Ukraine could collide with corrupted bankers to manipulate the exchange rate. This is precisely what happened as the pegged exchange rate was abandoned in the beginning of 2014. In several days, from February 24 to 27, 2014, Ukrainian Hryvnya devalued by 27%.

Confiscation of saving by means of devaluation did not finish in February 2014. Though the Productive Class of Ukraine started to massively convert its saving in hard currencies, the amount of hard currency one can buy per day was limited. Losses caused by emergency UAH assets sales, by new taxation and by other extra ordinary events continued to grow. More losses occurred as Ukrainian banks started to go broken.
Overall, the losses of the Productive Class in Ukraine between January 2014 and March 2015 can be estimated at 55-60% of the Hryvnya nominated saving at the beginning of this period. The total figure of losses by the Productive Class of Ukraine can be calculated as follows: (608 [billion UAH]*57.5%)/8[UAH/USD]=43.7 billion USD!

Ukrainian government of marauding idiots, elected by cattle-citizens, allied with IMF and provoked a demise of the Ukrainian currency. The savings lost by the Productive Class in Ukraine can be estimated at 43.7 billion USD!

This sum corresponds to the 55-60% of all savings in UAH as of the end of 2013. The data used to calculate the losses of the Productive Class in Ukraine: total savings in UAH by population and companies: 608 billions UAH, estimated losses due to devaluation: 57.5%, exchange rate at the end of 2013: 8 UAH/USD.

The situation continues to deteriorate. Under a looming threat of a total crash, the Productive Class had to withdraw its money from the banks. Also, due to the lunatic actions of the president of Ukraine Poroshenko and the prime minister Yatsenyuk, the two “Marauding idiots”, it became impossible for many to further conduct business. Therefore, as of now, in March 2015, a large proportion of the Productive Class has to eat away their remaining savings.

The number of people in the Productive Class group who have to eat away their savings can be estimated at 5 million. The monthly sum they spend (eat away) can be estimated at 300 USD. Thus, the Productive Class may eat away up to 1.5 billion USD each month. This sum, 1.5 billion USD, is considerably higher than the amount that the IMF can lend to Ukraine. Indeed, the West promised a total of 17 billion USD over several years, touting it as a “miraculous and very generous aid program”. But if the Productive Class eats way 1.5 billion USD per month, in a year it will be 18 billion USD or more than the entire “financial aid program” of IMF over several years.

It is clear therefore that an unprecedented robbery of the Productive Class has been taking place in Ukraine since the beginning of 2014. No loans from the IMF can compensate Ukrainian economy for that. The amount of possible IMF aid (17 billions USD) is dwarfed by what the Productive Class lost in a criminal devaluation (43.7 billions USD). Moreover, the receivers of the IMF’s aid are the marauding idiots from the Ukrainian government. They only thing they know is to maraud. The Productive Class, the real producers of wealth, won’t receive anything from the IMF’s possible loan.

Today, only a revaluation can save Ukrainian currency, Ukrainian financial system, the economy. And with it, the Productive Class in Ukraine.

Vladimir Putin and Christine Lagarde © Mikhail Klimentyev/TASS

Vladimir Putin and Christine Lagarde © Mikhail Klimentyev/TASS

There are forces in Ukraine, political parties, experts, who advance the idea of currency revaluation. But the IMF and other bureaucrats deal exclusively with the marauders.

Another conclusion from this story is that IMF is extremely incompetent as organization. The incompetence of the current IMF is likely to surpass that of the ex-Soviet central planners during the decline years.
Also worth considering a possibility that the IMF participates in a special operation against Ukraine. Indeed, a couple of year ago, the current head of the IMF, Christine Lagarde, a French, personally negotiated with Putin a purchase of 129 billion EUR worth of French government debt. The current activity of the IMF mission in Ukraine, also led by a French, resembles a lot a conspiracy to destroy Ukrainian economy as a kickback to Putin.

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