Bloomberg is reporting that the World Bank "may lend 'several billions of dollars' to Russia in the next two years to bolster social programs as the international body forecasts a sharper economic contraction in the country this year."
This is probably a bad time to ask, but why on earth is the World Bank lending Russia money, when the Kremlin continues to spend $12 billion on the most expensive Winter Olympic Games in history?
Countries which require emergency international assistance don't often get to host an Olympic event. This is due to the gross hypocrisy and painful symbolism that occures when a government can't fund its social programs because all the money was spent on a ski lift.
But please, World Bank, feel free to lend the money. We’re sure the Kremlin will use it prudently.
More caviar, anyone?
3 comments:
The fact is, Olympic ski lifts are investment spending as much as highways and schools are. They're going to pay a dividend and continue to pay a dividend long after the Olympics are over. If anything, the knowledge that this investment will pay dividends (unlike, say, chandaliers in subway systems) should reassure the World Bank that Russia won't default!
World Bank's purpose is not emergency international assistence, this is IMF's business and IMF money comes with restrictions like keeping budget deficit below certain threshold, but generally it can be used for everything you want(like paying pensions).
WB's money on the other hand comes with no restrictions, but can only be used for priorly agreed projects,in most case social or infrustructure projects.
taking WB money is Russia a better alternative than issuing bonds, WB's interest is lower
Anonymous -
And the IMF is even starting to relax things like the budget deficit restrictions (in my mind, a good thing).
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