Chapter 8

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This article relates to the stabilization loans Ukraine were due to recieve from the IMF (International Monetary Fund). Ukraine, one of the economies hit hardest by the recession, after months of heated debates persuaded the IMF to loan $16.4 billion. They were to recieve the loan in parts and recieved their first $4.5 billion last year. However, with political battles raging on and the opposing parties against the loan, the IMF has temporarily decided to withdraw from Ukraine. The IMF stated that they plan to study the situation more closely. They have left the matter of whether they plan to lend the second share of the money in the air. Upon the start of the recession, Ukraine's currency had immediately lost 40% of its value. Since then unemployment rates have nearly doubled.



First of all, this article relates to stabilization. The government's effort to borrow money and release it into circulation would increase the supply of money and promote consumption. The government by borrowing money is trying to revitalize the economy and increase employment levels. There is disagreement with this policy probably because employment and inflation are connnected and have a trade-off which is displayed by the Phillips curve. If unemployment were to be decreased it would most likely also create inflation and cause prices of goods to rise. The endeavor to increase the monetary supply is also a part of the monetary policy. And lastly, the concept of public debt can also be found in this article. As the government keeps borrowing more money, it will become harder to pay off and, eventually turn into a liability in the future. Loans are however a temporary measure and the boost it provides to the economy can carry on for lengthy periods of time.



With rising unemployment levels, the demand for loans have increased. Money, for countries, have become increasingly hard to obtain. The IMF lends money to countries that really need it and agree to spend it on solving their problems. In the case of Ukraine, even though the government had initially convinced the IMF, all her oppositional parties were against this. The government believes this to be a conspiracy against her with, the ultimate goal of reducing her political support. Although the IMF has decided to take a closer look at the situation they have withdrawn for now. When the wellbeing of a nation or even the world is at stake it should be all our jobs to work together. In the situation of Ukraine, political compromise will be necessary if they are planning to advance anytime soon. Regardless of whether or not the real motives of the opposition were negative, a common ground needs to be found. Recessions can damage an economy while, politics can destroy one.