KIEV, Ukraine, March 2 (UPI) -- The Ukrainian Parliament is preparing to vote on reforms, ordered by the International Monetary Fund to secure a loan, as inflation in the country continues to soar.
Changes in the country's tax and energy laws, and severe and unpopular cuts to social spending and to the budget, will put the Ukraine in line with International Monetary Fund (IMF) demands before a $17.5 billion assistance program can reach the country, Prime Minister Arseniy Yatsenyuk said. The IMF loan could lead to an additional $40 billion from other lenders.
"I expect that during the discussions in the parliament we'll see quite a bit of populism," Thomas Fiala, chief executive of the Ukrainian investment bank Dragon Capital told the BBC. But there are enough votes to see this legislation passed, and the politicians are now with their backs to the wall. The alternative to approving this program and receiving the support of the IMF would be devastating."
The debate over reforms comes as Ukraine's official annual inflation rate hit 28.5 percent; the hryvnia, the Ukrainian currency, was pegged at eight per U.S. dollar before the conflict in the eastern part of the country in February 2014. It fell to as low as 33.5 to the dollar and is now trading at 27.2 to the dollar.
Johns Hopkins University professor Steve Hanke told the Washington Post a way of looking at currency devaluation involves the way a cheaper currency can purchase imported goods; by that measurement, Ukraine's current inflation rate is 272 percent per year.