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You're reading: IMF to visit Ukraine to assess budget

WASHINGTON - An International Monetary Fund team will visit Ukraine in September to assess its budget plans as the cash-strapped country tries to persuade the lender to restart a $15 billion loan program, a top Ukrainian official said on July 31.

Valery Khoroshkovsky, first deputy prime minister, told
Reuters through a translator he met with IMF Managing Director
Christine Lagarde on Tuesday, July 31, and reached “a general
understanding that in September IMF representatives will come to Ukraine to assess our budget planning for 2013.”

The IMF froze a $15 billion loan program for Ukraine after
the government failed to raise gas prices at home and carry out
other unpopular reforms.

With a parliamentary election in October, the Kyiv
government has balked at taking the politically risky step of
raising gas and heating prices for Ukrainian households by 30 to
50 percent, as pressed by the IMF.

Khoroshkovsky said he told Lagarde raising prices would
create a social crisis unless Ukraine first developed a system
to help the most vulnerable segments of its population cope.

He declined to characterize Lagarde’s response because of
the confidential nature of the meeting, but said the IMF’s main
concern was Ukraine’s macro-economic stability and the Kyiv
government recognizes it has more work to do on that.

“We understand that without resolving all key problems, the
financing will not be unfrozen. So we agreed that we need to
ensure macro-economic stability as the basic precondition and
then we will work to resolve all other subjects,” he said.

Khoroshkovsky also met with U.S. Trade Representative Ron
Kirk on July 31 and they discussed steps the two countries could
take to increase what he said was the “ridiculously small” level
of trade between Ukraine and the United States.

Two-way trade totaled just $3.6 billion last year, roughly
half of Ukraine’s trade with Belarus, he said.

The countries established a “Trade Experts Groups” to
explore ways to boost bilateral trade and investment flows,
according to a joint U.S.- Ukraine statement.

Khoroshkovsky said he also pressed the U.S. government to
remove duties it imposed on Ukrainian steel and chemical
products sometime before 2006.

Lifting the duties could boost Ukraine’s exports to the
United States by $1 billion, he said.

The main justification at the time for the duties was low
Ukrainian natural gas prices, which have more than doubled
since, Khoroshkovsky said.

Khoroshkovsky said he did not expect talks on a free trade
pact with the United States any time in the near future.

Earlier this month, Ukraine and the European Union finalized
the text of a free trade agreement but implementation remains on
hold because of political concerns.

The current government’s jailing of Ukrainian opposition
leader Yulia Tymoshenko and some of her allies has strained ties
with both the EU and the United States.

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