Ukraine To Resume Pitch For IMF Lending

KIEV Ukraine -- Only days after President Viktor Yanukovych reshuffled the government by replacing its finance minister, Ukraine is apparently poised to accelerate efforts to win resumption of borrowing from the International Monetary Fund.

Ukraine Prime Minister Mykola Azarov.

Prime Minister Mykola Azarov said a government team will travel to Washington on January 24 to try to persuade the IMF to resume its $15.5 billion loan to Ukraine.

“We are sending the team to Washington for meetings with the IMF,” Azarov said in a statement released by the government.

“We want to hold a round of talks in hopes of getting mutual understanding with the leadership of the Fund.”

The comments come as reports emerged that Fedir Yaroshenko’s resignation from the post of the finance minister on Wednesday had been probably caused by his failure to win resumption of IMF borrowing.

“Yaroshenko was blamed for the failure to resume the borrowing from the IMF,” a person at the government familiar with the issue told Kommersant daily.

Yaroshenko, a close ally of Azarov, was replaced with Valeriy Khoroshkovskiy, a former security service chief, as analysts said the government had been facing a mounting foreign debt problem amid its inability of securing either international or domestic borrowing.

Former Finance Minister Viktor Pynzenyk estimated Ukraine’s overall foreign debt at $123 billion, of which $52 billion, he said, must be paid during the next 12 months.

Pynzenyk said the amount actually exceeds Ukraine’s foreign exchange reserves, which may explain why the government needs resumption of lending from the IMF.

The IMF approved $15.5 billion loan in July 2010, disbursing $1.87 billion to Ukraine shortly afterwards.

The IMF also disbursed $1.5 billion to Ukraine in December 2010, after which the lending had been suspended because the government had failed to implement reforms that had been earlier agreed upon with the Washington-based lender.

Yaroshenko, together with Deputy Prime Minister Serhiy Tyhypko, was holding talks with the IMF in November 2011, but the talks had failed to resume the lending.

One of the key demands from the IMF is that the government must hike at least 30% natural gas prices for households, a measure that the ruling Regions Party sees as politically sensitive that may cause trouble for the party ahead of upcoming parliamentary elections in October.

Source: Ukrainian Journal