You're reading: Important for Ukraine to achieve resumption of financing by IMF, say experts

 It is very important for Ukraine to achieve the resumption of financing by the International Monetary Fund (IMF) so as to prevent the worsening of the social and economic situation in the country, political and economic experts said at a press conference at Interfax-Ukraine on Feb. 1, 2013.

“Large-scale cooperation with IMF, including financing, is the minimum condition for revival,” said the director of economic programs of the Razumkov Centre, Vasyl Yurchyshyn.

“Cooperation with the IMF today is a crucially required for Ukraine… In 2013-2016, we have to pay around 52% of our internal and external debts. The question arises: how are we going to do this?” the director of the Institute for Economic Research and Policy Consulting Ihor Burakovsky said.

He said that Ukraine is in the recession now: the country has approached the line at which radical actions are required, or to declare the country bankrupt, as it is failing to achieve anything.

Burakovsky said that the financing of IMF foresees the implementation of important economic reforms.

“If we don’t want to cooperate with IMF, this means that we don’t want to reform our economy,” he said.

He said that current talks with IMF would be complicated, as there are many candidates for the fund’s money in the world, while Ukraine has a bad history of cooperation with the IMF. However, even if the circumstances for resumption of financing were favorable, it could take up to four months to get them.

Burakovsky also said that the refusal from the IMF’s money would require switching to a strict austerity regime in the country and the start talks with investors on restructuring state debts.

“It’s clear that in the said conditions, the question of the possibility of raising politically clean money has to be raised. This concerns the placement of Ukrainian debt liabilities which are not linked to political obligations, for example, in Russian banks,” he added.

Yurchyshyn said that financing by the IMF is the most acceptable in terms of cost for Ukraine, while the placement of eurobonds attracts more expensive resources.

He also said that a valid program of cooperation with the IMF is an important signal for international investors.

Head of the Penta Center for Applied Political Studies, Volodymyr Fesenko, said that in the present situation, any choice made by the Ukrainian authorities will lead to losses: without the IMF’s financing the risk of a debt crisis will grow, while the attraction of financing from the fund will bring a fall in political ratings due to the realization of unpopular reforms.

“We can take [a loan] from Russia. But this means that the economic and political sovereignty will be lost for a period of time,” he added.

Director of the Institute for Global Strategies Vadym Karasiov said that giving up IMF financing could be a reason for a split in the ruling circles of the country, as a part of the elite is oriented to the European Union and they will oppose an increase in the level of Ukraine’s isolation.

“Today the main flaw of the government is the absence of a certain professional level. A lot of professionals are staying away from the government,” Karasiov said.

As reported, an IMF mission led by Christopher Jarvis arrived in Kyiv on January 29. The mission is planning to work in Ukraine until February 12. Ukraine’s First Deputy Prime Minister Serhiy Arbuzov said on January 14 that Kyiv intended to get opened a new program of financial cooperation with the IMF to the tune of SDR 10 billion.

The previous Stand-By Arrangement between Ukraine and the IMF terminated in December 2012.

In late July 2010, the IMF decided to renew its loan partnership with Ukraine through a new Stand-By Arrangement worth SDR 10 billion (over $15 billion). According to the National Bank of Ukrain, the country succeeded in getting two tranches worth a total of SDR 2.25 billion ($3.4 billion).