The Ukrainian parliament had to approve the 2015 budget amendments to comply with the terms of the IMF. The country is intended to receive a large credit and as a borrower it should meet a number of agreements. The changes see the increase in the rent charged for gas production from 20% to 70%, a 15% cut in pensions, and the job tenure extension for people working in hazardous and heavy industries. Ukrainian Prime Minister Yatsenyuk said that they are accepting the bills which make up a part of the preliminary conditions for the financial support. “I am sure that after our vote, the IMF board will meet on March 11 and take a positive decision for Ukraine," Arseniy Yatsenyuk said. External financing will increase foreign exchange reserves which will help stabilize the hryvnia. According to the new budget, the economy should contract 5.5%, the previous data suggested 4.3% decline, and the inflation rate should soar to 26% from 13.1%. However, despite the fact that the IMF will possibly agree to release a loan, investors are getting ready to the Ukrainian debt conversion. There are enough reasons for that but the main one is a sweeping reduction of the foreign currency earnings. From January to February the indicator declined by 45% annually that is $5 billion. National Bank chief Valeriya Hontareva said that the data is very alarming. Moreover, the country’s economy may suffer hyperinflation. American professor Steve Hanke from Johns Hopkins University suggests the real inflation rate is 272 percent, the world’s highest. “Hyperinflation is always and everywhere a political phenomenon,” he said. “It happens after wars or revolutions, when governments have to print the money they need because there's not much of an economy left to tax—which brings us to Ukraine.”
