Ukraine PM Promises Change To Unblock IMF Funds

KIEV, Ukraine -- Ukrainian Prime Minister Yulia Tymoshenko on Wednesday promised to alter government policies to to secure the International Monetary Fund's approval to release further credits from a $16.4 billion loan.

PM Yulia Tymoshenko

The IMF suspended the credit's second tranche after disagremeent over implementation of the programme, with one of the main disputes centring on the size of the budget deficit.

The office of President Viktor Yushchenko, the prime minister's former ally but now her arch rival, on Tuesday said the IMF was still at odds with Ukraine, mainly over the deficit.

Tymoshenko, addressing her cabinet, said decisions would be taken to restart talks with the Fund.

'After discussions in recent days, we have worked out a joint position on adjusting the programme between Ukraine and the IMF,' she said. 'The government's decisions today will set down initial measures so that the IMF mission can return.'

Present at the cabinet meeting alongside ministers were officials from the local offices of the IMF and the World Bank.

Yushchenko, Tymoshenko and central bank chief Volodymyr Stelmakh were to meet later in the day to discuss resumption of talks with the IMF.

They and other senior figures sent a letter to the Fund last week setting aside longstanding policy differences and pledging to implement the agreement.

Top politicians have suggested that the Fund is willing to accept a gap greater than 1 percent of gross domestic product.

Government officials have before said that while the IMF demanded a smaller deficit, that referred to a cut to 3 percent from a real deficit identified by the Fund as being 6 percent.

The IMF initially demanded a deficit-free budget, but has since said a 1 percent or even higher gap was acceptable, provided Ukraine could finance it without fuelling inflation.

But Tuesday's statement from the president's office said the Fund was seeking a reduction in the size of the deficit.

Ukraine has already received the first $4.5 billion tranche under the IMF programme. It hopes the remainder will help offset reductions in its foreign currency reserves, capital outflows and shrinking world markets for its steel and chemical exports.

Source: Life Style Extra