John Helmer — THE IMF IS POSTUREPEDIC, SO IGOR KOLOMOISKY CAN SLEEP WELL AT NIGHT

The International Monetary Fund (IMF) has decided to give the Ukrainian banks R&R&R – that’s rest from regulation and refinancing. Inspection of the foreign exchange book, unwinding related-party credits, recovery of non-performing loans, and obligatory recapitalization, which were all conditions of the Fund’s 2014 Ukraine loan, have been relaxed. The new loan terms announced by the IMF last week, postpone reform by the commercial banks until well into 2016. In the meantime, the IMF says it will allow about $4 billion of its loan cash to be diverted to the treasuries of the oligarch-owned banks. That is almost one dollar in four of the IMF loan to Ukraine.

The biggest beneficiary of last year’s IMF financing is likely to repeat its good fortune, according to sources close to the National Bank of Ukraine (NBU). This is PrivatBank, controlled by Igor Kolomoisky (lead image), governor of Dniepropetrovsk region and financier of several units fighting on Kiev’s side in the civil war.

Last Thursday, the IMF’s chief spokesman, Gerry Rice, claimed in a press conference that “the authorities [in Kiev] have demonstrated a strong commitment to reforms. They have implemented, as you have seen, last week a set of prior actions that in many respects breaks from the past and tackles issues that were once considered taboos.” 

The taboo against admitting failure is one the IMF hasn’t broken. The new loan dossier reveals that IMF supervision of the Ukrainian banks, introduced last April and pursued through ten months, failed to staunch capital outflow from the Ukrainian banks; failed to recover value from the assets of insolvent institutions; and failed to require control shareholders to recapitalize their bank balance-sheets. These include Kolomoisky’s PrivatBank; Rinat Akhmetov’s First Ukrainian International Bank (FUIB, Cyrillic acronym PUMB); and Credit Dnepr Bank of Victor Pinchuk. The remedy, newly proposed by the IMF last week, lets the oligarchs off the hook, promising to feed their banks with public funds. That’s to say, IMF funds....

Translation: IMF bails out Ukrainian oligarchs.

According to the latest IMF staff report, the Ukrainian banks are now in a worse condition than they were last June. This is because the cash provided by the IMF and the World Bank through the NBU and the Deposit Guarantee Fund (DGF) has disappeared from bank balance-sheets and left the country....

Fund officials now reveal they were novices at Ukrainian accounting, admitting “the balance sheets of intervened banks turned out worse than the books indicated; little value has, so far, been recovered from the assets of failed banks.”

Gets worse.

Even former US White House officials are conceding this week that if the Ukrainian Government lacks the clout to “map” the oligarch groups, it cannot govern, and cannot reform. “Ukraine survives today,” according to this Clinton Treasury official, “largely on the good will of several oligarchs. More robbers than barons, these bosses control key provinces, fund private armies and finance divisive factions in Parliament.”

Hey, they have mastered the neoliberal model. Why shouldn't the IMF reward them with funding?

Dances with Bears
THE IMF IS POSTUREPEDIC, SO IGOR KOLOMOISKY CAN SLEEP WELL AT NIGHT
John Helmer