http://www.economist.com/blogs/freeexchange/2015/12/other-war-ukraine
The Ukraine has mixed politics with economics and is stuck in a debate between two plans. Plan A is pushed by the Ministry of Finance and supported by the IMF because it will make the budget deficit only 4% of its GDP. The IMF is known for having strict policies and because of this they do not support Plan B which would allow for a 10% Budget Deficit. Plan B, however, is supported by a member of the the president's party and is politically beneficial because it offers the public "hefty tax cuts."
This is another good example of economics and politics colliding. If Plan B is chosen then the IMF will stop disbursing bail-out funds to the Ukraine which would be detrimental to their economy. The current president, however, is worried about popularity, and tax breaks are always popular to the general public. The Ukraine is at a fork in the road and if they choose the wrong route, they will be looking at even tougher times ahead.
2 comments:
The Ukraine situation demonstrates what is popular is not always right. The President continually sides with the people for tax cuts. Unfortunately, Ukraine's poor performing economy, simply cannot afford tax breaks. The Ukraine president needs to come to a realization that the countries economic stability is more important than getting elected. Choosing plan A and siding with the IMF is the only way Ukraine can remotely recover.
I agree with Austin. This demonstrates the need for a president to do what is best for the country and its people when the people don't necessarily agree. The president understands what is happening in the country on a level that an average citizen does not. This allows them to make decisions for the benefit of everyone. Plan B may be what is popular, but it might not be the best for the country. Plan A seems like the right choose because then Ukraine will have the IMF on its side.
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