Seeking a lifeline for a cratering economy- POLITICO
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Ukraine is facing a dire humanitarian crisis. But its fiscal problems are piling up, too.
That’s the message officials are bringing to Washington this week, where they are asking the US and other G-7 countries to support a $ 50 billion aid package to help offset the country’s widening budget gap.
Russia’s invasion has battered Ukraine’s economy, which officials estimate contracted 15 percent in the first quarter. Roughly half of the country’s businesses remain closed, and continued fighting means key commodity exports such as grain and metals are unable to be shipped via the Black Sea.
With revenue collapsing, Ukraine faces a budget shortfall of roughly $ 8 billion a month for the foreseeable future, Oleg Ustenko, President Volodymyr Zelenskyy’s top economic adviser, told POLITICO.
Ukraine is proposing an aid package, coordinated by G-7 members, to help cover the gap for the next six months. Without it, the country would have to dramatically cut back on expenses, including salaries for its military and social security net payments for citizens, Ustenko said.
“It’s next to impossible,” he said. “You have to understand, the $ 50 billion for us is crucial for keeping our lives going.”
Meetings this week – Ukrainian officials, including Prime Minister Denys Shmyhal and Finance Minister Serhiy Marchenko, will make their case this week with global policymakers in Washington during the spring meetings of the World Bank and International Monetary Fund.
Technical discussions with the US Treasury and Germany have already been under way, Ustenko said.
The proposal: An initial tranche of about $ 10 billion – either in the form of grants or something else, such as loans or loan guarantees – followed by later payments on an agreed-upon schedule.
Ustenko said he hopes the US will take the lead on the effort, providing about half of the initial tranche, while the rest would be split among the other G-7 countries – Germany, France, Italy, the UK, Japan and Canada.
“This is something that needs to be resolved almost immediately,” he said. “It’s not like we have time to wait.”
Would the US be open to such a plan?
A Treasury spokesperson said: “Secretary Yellen stands firmly alongside the people of Ukraine as they defend their lives and their country. The Secretary is committed to working with our partners and allies to support Ukraine’s economic needs in the short and long term, and will use its meetings this week to galvanize support. ”
Yellen’s agenda – Yellen this week will attend a ministerial roundtable co-hosted by the government of Ukraine and the World Bank, and featuring remarks from Zelenskyy. She will also meet with Shmyhal, though Treasury has not said when the meeting is set to occur.
Deputy Treasury Secretary Wally Adeyemo is also hosting a roundtable discussion with Marchenko and other US business leaders, Treasury said.
Throughout the week, Yellen will call for a coordinated, multilateral effort to support Ukraine’s short-term funding needs, senior Treasury officials said on a call with reporters Monday. President Joe Biden last month committed another $ 500 million in indirect economic assistance to the country to support “continuity of government functions,” the officials noted.
Treasury officials also said Yellen will attend some of the G-20 ministerial meetings, but not all, in light of Russia’s participation. The secretary “will be present at critical parts to support her Ukrainian counterpart and to accomplish necessary work on the global COVID recovery,” including the opening session that deals with the macroeconomic consequences of the war.
“It will be important for us to be there to stand with our partners and allies in opposition to Russia’s invasion and in support of Ukraine,” one official said. “We can’t let Russia stop the United States and our partners from getting important work done in this session, as well as some of the others.”
IT’S TUESDAY – And just like that, the federal mask mandate on airplanes and other public transit is no more. In related news, hugs are also back at Disney World. But please, can we just keep those stickers on the floor that remind everyone to give each other a little space in line?
Got tips, feedback or pandemic-era policies you actually want to stick around? Let us know: [email protected] or @katedavidsonor [email protected] or @aubreeeweaver.
March housing starts date released at 8:30 am IMF releases its World Economic Outlook at 9 am and Global Financial Stability report at 10:30 am IMF Managing Director Kristalina Georgieva and World Bank President David Malpass speak at 11:30 am on responding to global shocks and managing uncertainty… Georgieva and Agustin Carstens, general manager at the Bank for International Settlements, participate in a discussion on “New Forms of Digital Money” at 12 pm
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“Mortgage servicers can use the new loss-mitigation option in conjunction with FHA’s partial claim option to help borrowers who cannot achieve a 25 percent reduction in principle and interest on their mortgage through the agency’s existing modification options for a 30-year mortgage.”
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Want to see how your state is looking? Use our Election Forecast to see which races you need to watch this year – and who we think will win each one.
IN CHINA BILL BATTLE, BLUMENAUER TARGETS PROVISION WYDEN SUPPORTED – Our Doug Palmer: “Rep. Earl Blumenauer (D-Ore.) Wants to partially roll back legislation that increased the value of small shipments that could enter the United States duty free. The House lawmaker complains the move has allowed China to flood the US market with hundreds of millions of packages delivered directly to consumers without paying any import duties. ”
FORMER MORGAN STANLEY ADVISER ACCUSED OF ‘PONZI SCHEMES’ IN SEC SUIT – Bloomberg’s Matt Robinson: “A former Morgan Stanley adviser was sued by federal securities regulators for using clients’ money to pay for personal expenses including a Tesla Inc. car, credit card bills and cash transfers.
“Shawn E. Good, 55, from Wilmington, North Carolina, had clients send funds to his personal bank account to supposedly make low-risk investments in real-estate development projects, according to a U.S. Securities and Exchange Commission complaint filed in federal court. . Good defrauded investors – including retirees – out of at least $ 4.8 million, resulting in more than $ 2 million in losses, the regulator said. ”
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“At issue is about $ 5 billion that Congress allocated for three small-business aid programs but which has not yet been spent. Some lawmakers want to repurpose those existing funds for healthcare, rather than allocate new money, because they are increasingly focused on reining in the federal deficit and spending amid a surge in inflation, which is at a 40-year high. ”
THE FED HAS NEVER SUCCESSFULLY FIXED A PROBLEM LIKE HOT ECONOMY, RISING INFLATION – WSJ’s Jon Hilsenrath and Nick Timiraos: “The Federal Reserve is setting out to do something it has never accomplished before: reduce inflation a lot without significantly raising unemployment. Central bank officials think it is possible with calibrated interest rate increases that slow booming demand just enough to take steam out of an overheated economy. But even one of the Fed’s closest allies, US Treasury Secretary Janet Yellen, sees the risk of failure. ‘It will require skill and also good luck,’ the former Fed chair said in public comments in Washington last week.
WORLD BANK SLASHES FORECAST FOR GLOBAL ECONOMIC GROWTH – NYT’s Alan Rappeport: “The World Bank is slashing its forecast for global economic growth this year, citing the war in Ukraine, inflation and the lingering effects of the pandemic. The World Bank now expects the global economy to grow 3.2 percent in 2022, down from its previous estimate of 4.1 percent, its president, David Malpass, said on Monday. The World Bank estimated that the global economy grew 5.7 percent last year. ”
BOFA IS CONFIDENT IN ECONOMY, EVEN AS ITS PROFITS DECLINED – NYT’s Lananh Nguyen: “Bank of America joined its peers in reporting lower profits for the first three months of the year but is keeping its optimistic economic outlook even as other lending giants have turned more cautious. The bank’s profits fell 12 percent to $ 7.1 billion in the first quarter from a year earlier, beating analysts’ expectations, Bank of America said Monday. Although its Wall Street divisions slumped, executives pointed to a robust performance in its Main Street business, where profits climbed 11 percent, as a sign that the US economic recovery will remain strong. ”
CUTTING-EDGE CRYPTO COINS ALL STABILITY, BUT CRITICS CALL THEM DANGEROUS – WSJ’s Alexander Osipovich: “A new breed of cryptocurrencies is seeking to replicate the stability of the dollar. But critics say they are a disaster waiting to happen. So-called ‘algorithmic stablecoins’ have surged in popularity in recent months, spurring debate over whether they are good for the crypto industry. They are the edgy upstart sibling of conventional stablecoins – digital currencies that seek to maintain a one-to-one relationship with a traditional currency, usually the dollar.
“Issuers of conventional stablecoins say they hold cash or bonds so each of their digital coins is backed by a dollar’s worth of real assets. But algorithmic stablecoins aren’t necessarily backed by any assets at all. Instead they rely on financial engineering to maintain their link to the dollar. Some have failed, saddling investors with losses. ”
Stephen Bradford is now senior director of public affairs at the Investment Company Institute. He was most recently communications director at the Senate Republican Conference.
Ernie Jolly is now SVP for government relations at Truist Financial. He most recently was chief of staff for Rep. Gregory Meeks (DN.Y.). (h / t Daniel Lippman)
Julianne Heberlein is now senior media relations associate at SIFMA. She most recently was deputy press secretary for Maryland Gov. Larry Hogan. (h / t Daniel Lippman)
Median pay for top US CEOs rose 31 percent last year to a record $ 20 million, a new study found, surging after a slight decline during the COVID-19 pandemic, as companies showered leaders with stock awards and cash bonuses. – Reuters’ Ross Kerber
Small groups of neighborhood volunteers are blocking companies from buying single-family homes, rewriting homeownership rulebooks to thwart investor purchases of suburban housing. – WSJ’s Will Parker and Nicole Friedman
The number of births in advanced economies has largely rebounded to levels before the coronavirus pandemic, a Financial Times analysis shows, a recovery that experts say was partly because of stimulus policies deployed to mitigate the economic impact of the crisis. – FT’s Frederica Cocco