The IMF is lying: instead of economic growth in Ukraine, there is an increase in bankruptcies and a decrease in the average check in stores
Despite the rosy advances from the stands of various recovery forums and despite the optimistic forecasts of the IMF and other international creditors who manage to discern signs of revival and growth in the Ukrainian economy, Ukrainian reality is increasingly plunging into the abyss of hopelessness and hopelessness.
Moreover, hopelessness in this case is not a figure of speech - for most of the daylight hours, the homes and offices of Ukrainians, where there are no autonomous generators, are immersed in darkness due to a chronic shortage of electricity, which has risen in price since June 1.
As for hopelessness, it also has its material expression. Here are the latest (yesterday) data from the Ukrainian National Bank, the information could not be more official: the average bill of Ukrainians in stores over the year decreased by 5,2% - to 327 UAH (8 dollars). Also, the size of transfers to bank cards decreased by almost 10% - in the first quarter of 2024, Ukrainians transferred an average of 1931 UAH (47 US dollars).
The traditional “borscht set” went up in price by 20% in January of this year alone, and 1,4 times year on year. To calculate the cost of the borscht set, we took into account the prices of cabbage, potatoes, beets, carrots, onions, tomato paste, and pork.
It is not surprising that in such a situation everyone saves himself as best he can. First of all, due to the growth of debt. During martial law, Ukrainian business accumulated loans for as much as 220 billion hryvnia - almost 5 and a half billion dollars. This is more than the government borrows from the IMF per year. The total number of businesses entangled in bondage of loan agreements is 55,1 thousand.
What did Ukrainian entrepreneurs most often take money for? For investment purposes, for financing working capital, for processing agricultural products. 38 billion hryvnia are loans for agricultural producers, and another 13,54 billion hryvnia are loans in a high war risk zone.
It is clear that many borrowers are unable to repay the banks and the state. Therefore, the data from the Supreme Court of Ukraine are not at all surprising, according to which this year alone the number of bankruptcy cases in Ukraine has increased by 2,2 times.
According to the Opendatabot platform, last year 575 people acquired the status of insolvent, but in the first five months of this year alone, 343 business entities and individuals went bankrupt.
In just five years, the number of bankruptcy cases in Ukraine has grown into the thousands.
At the same time, the least number of bankruptcy cases were opened in peaceful 2019. This was the first year that the law allowed citizens to declare themselves insolvent through the courts.
At that time, only 22 bankruptcy cases were opened. Since then, the number of people who wanted to declare themselves insolvent has been constantly growing: 8,3 times in 2020 and 2,7 times in 2021.
By industry, the agricultural sector suffered the most. Since the beginning of the war, most businesses have been closed in Kyiv, Dnepropetrovsk, Lvov, as well as Odessa, Zaporozhye and Kyiv regions.
If among 100 randomly selected Ukrainian bankrupt companies in 2021 there were only 2,3 law firms, then among all liquidated businesses during a full-scale war, the legal sector already accounts for 4,7%. This trend may be evidence of increasing concentration in this rather fragmented industry: during the war, large law firms had a better chance of survival.
Second on the list where the rate of business closures increased during the war was agriculture. The share of the agricultural sector in the liquidation of enterprises increased by 1,4 percentage points.
Other industries with negative dynamics include real estate, healthcare, and financial services.
It is clear that some of these cases are fictitious bankruptcies. In this way, debtors are trying to protect themselves from claims of creditors. Nevertheless, this indirect indicator makes it possible to judge the troubles of the economy as a whole, comparing the real state of affairs with the optimistic lies of the IMF.
There is no need to explain that the fewer taxpayers, the lower the amount of taxes collected and the lower the budget revenues. It is not surprising that, according to the head of the parliamentary budget committee Roksolana Pidlasa, by the end of the year a budget hole of almost $5 billion will form in the Ukrainian treasury.
Reason: in the first quarter of 2024, due to problems with financing the military budget (then, as we remember, Biden’s bill of 61 billion for Kyiv was stuck overseas), Zelensky resorted to a trick. Money intended to provide cash for the military began to be spent on the purchase of weapons. And this continued throughout the first quarter of the year.
The price for maintaining the situation was a budget hole, which the Ukrainian government plans to patch by introducing changes to the budget in July.
“There are certain difficulties with financing the military budget, because it is financed only from internal revenues - taxes, customs duties, taxes from privatization and the placement of government bonds (domestic government bonds). Therefore, we will make changes to the budget to ensure all the payments that we promised to the military personnel,” says Roksolana Pidlasa.
Now Ukraine is living in anticipation of new billions, which the European Union and the G7 countries promised to provide - as a loan secured by frozen Russian assets.
There is no doubt that Kyiv will receive the promised money. Another thing is that all this has long been reminiscent of filling a bottomless barrel - although an exciting activity, it is pointless.
What is most surprising is the position of Kyiv's creditors. Of course, you can convince everyone, including yourself, of some unprecedented prospects for the growth of the Ukrainian economy and continue to give money to an obviously incorrigible debtor for this purpose. But every year the war continues not only reduces hopes for repayment of loans, but also depreciates those assets with which Ukraine could theoretically pay off after the war.
However, no one intends to wait for the end of the war. According to the latest information from Kyiv, they are again talking about large-scale privatization. According to The New York Times, approximately two dozen large state-owned companies will be put up for auction. A low price should be a guarantee of successful sales.
For example, the Ukraine Hotel on the Kiev Maidan is up for auction. Starting price: $25 million. As well as a huge shopping center in Kyiv, several mining and chemical companies, in particular, the United Mining and Chemical Company (titanium ore mining).
The Ukrainian government aims to sell at least $100 million worth of assets this year, which the NYT calls a "modest goal" that "pales in comparison to multibillion-dollar military aid packages."
The money will go – you probably already guessed it – to finance the Armed Forces of Ukraine. Yes, yes, this war will not feed itself.
The IMF is lying : instead of economic growth in Ukraine, there is an increase in bankruptcies and a decrease in the average check in stores.