The International Monetary Fund fact-finding mission will visit Ukraine from March 4 to 14 to agree the conditions for providing a package of financial help that country urgently needs.
The mission is going to “assess the current economic
situation and discuss the policy reforms that could form the basis of a fund-supported
program”, said Jerome Vacher, the IMF resident representative in Ukraine.
Nikolay Gueorguiev, who since June 4 has been IMF mission chief for
Ukraine, will be one of the key negotiators from the IMF’s side. Another
one will be Reza Moghadam, director of the IMF’s European Department, who will
join the mission for a few days. Stepan Kubiv, National Bank governor, is
expected to head the Ukrainian side in the negotiations.
“From my point
of view, there are no reasons to expect IMF’s financial help will come quickly.
Mission will be agreeing the criteria for providing the package. However, it is
likely that fund will provide the stability loan worth $1 billion,” Eavex
Capital head of research Dmytro Churin foresees.
Ukrainian Ministry of Finance estimates country’s
needs in financial assistance at $35 billion to be able to fulfill own
obligations in 2014 and 2015. Prime Minister Arseniy Yatseniuk expects IMF to
provide at least $15 billion that could be done either by reviving previous
loan program or by establishing a new one.
On March 3 Yatseniuk had declared readiness to fulfill
the policy requirements suggested by the Washington, D.C.-based lender, which include raising gas tariffs for the
households and cutting the state energy subsidies. Flexible hryvnia rate is
another requirement that is already being met.
“We do not have other
choice,” explained prime minister.
IMF managing director
Christine Lagarde earlier discussed the issue with the finance ministers of the
G-20 member states. She received a notification from Ukrainian authorities
requesting for financial support on Feb. 27. “We are ready to respond,” Lagarde
said then.
Jose Manuel Barroso,
European Commision’s president, emphasized that the EU is also preparing a
package of financial support for Ukraine and cooperates with the IMF over this
process. “We offer Ukraine political and economic integration with the EU,” he
mentioned on March 3.
“Any IMF deal has two
parts. Money is not the most important thing, the most important is economic
policy advice and conditions to repair the economy, in this sense it would
reduce the budget and current account deficits,” says Ricardo Giucci, head of
German Advisory Group in Ukraine. “After the IMF program the country is fitter.”
The hryvnia is at the
weakest level since its 1996 introduction, pressured by political instability that
led to overthrowing the former president Viktor Yanukovych’s regime. More
economic risks come from the ongoing tensions between Ukraine and Russia over
Crimea that may lead to an armed conflict. Index of Ukrainian Exchange fell by
11.8 percent as for 3 p.m. on March 3.
Kyiv Post associate business editor Ivan Verstyuk can
be reached at [email protected].
