Ukrainian President Viktor Yushchenko said Thursday he was hopeful the country would soon receive an emergency loan from the International Monetary Fund, saying it is the only chance for the ex-Soviet nation to stay intact in the financial storm.
Yushchenko said he was confident his political rival, Prime Minister
Yulia Tymoshenko, and parliament would agree to trim government
spending — a key condition set by the IMF to secure the $16.4 billion
rescue program.
The IMF froze a second installment of the loan earlier this month
after Tymoshenko refused to cut spending, prompting downgrades from
rating agencies.
“I think I have a strong enough case to convince the government to
amend the budget,” Yushchenko told a meeting of IMF representatives and
G-7 ambassadors.
Ukraine, like many countries in eastern Europe, has been hit hard as
panicked investors have fled emerging markets, dumping local stock and
currency. The Ukrainian currency, the hryvna, has lost 47 percent of
its value since September, trading at 9.2 to the dollar on the foreign
currency exchange Thursday.
In his strongest language to date, Yushchenko said that the IMF loan
was the economy’s only chance to survive. “The question of whether
Ukraine will overcome the financial crisis lies in the dimension of our
relations with the IMF,” Yushchenko told the meeting.
Meanwhile, Standard and Poor’s downgraded three large Ukrainian
banks, Ukrsots, Alfa and Kredo from B/B to CCC+/C. That followed its
downgrade of the country’s sovereign credit rating, citing political
instability and the IMF loan freeze.
The central bank has so far taken control over eight banks as the
financial system suffers from a liquidity shortage and confidence
crisis.
