Ukrainian politicians not to give IMF chance – expert opinion
According to press release passed to UNIAN by Gorshenin Institute, it is very unlikely that there will be a consensus reached between the branches of Ukrainian government before the presidential elections.
Such was the experts’ opinion expressed in the survey regarding cooperation with IMF carried out by Gorshenin institute.
IMF has refused to give Ukraine the forth tranche of the stand-by loan. IMF Chief Dominique Strauss-Kahn said that the Fund will continue cooperation with Ukraine if there is a consensus between all government branches which will most likely happen only after the presidential elections.
Director of Gorshenin Institute Kost Bondarenko is sure that consensus in the Ukrainian Government regarding cooperation with IMF is very unlikely today because of the presidential elections. According to the experts IMF decided to deny Ukraine the forth tranche because it has adopted a new law that increases the standards of living. Despite the fact that IMF chief is a French socialist the Fund calls on the countries-borrowers to limit social benefits for their citizens. Especially in the time of economic crisis. Dominique Strauss-Kahn understands very well that increase of benefits, salaries, social security and other payments will lead to economic collapse of developing countries, including Ukraine. That’s why IMF can not give new tranches to unstable countries, noted Mr. Bondarenko. He also added that the consequences of such policies for Ukraine are very multi-dimensional. On one hand Ukraine is in dire need of this loan, most of all to pay for Russian gas. On the other hand speaking of political dividends, today the Party of Regions can celebrate a small victory. They have tripped Tymoshenko’s Cabinet. It is though difficult to assess the impact of this situation on the future of Ukrainian economy. Any loan is a two headed animal. In the short run Ukraine gets certain capabilities and instruments. In the long run – any debt for any country is a heavy burden, says Mr. Bondarenko.
President of the Center for Social studies “Sofia” Andrey Yermolayev thinks that the chances that Ukrainian politicians will find a common ground before the elections are very low. May be they will have consultations that will result in a declaratory document, let’s say a letter to IMF, for instance. But it is imperative that legislators support such effort. Rada members are the only guarantors that any promises given by the Government are supported by legislation and reflected in the Budgets for 2009 and 2010. It is a possible but very unlikely situation. According to the expert, suspension of cooperation with IMF for Ukraine means failure of the Budget 2009. There is a real danger that the Budget will suffer from serious deficit – federal salaries dept will grow and there is a risk of destabilizing the Retirement Fund which is mostly dependent on the Budget subsidies. The only way to strengthen national Budget today is emission. That is why Tymoshenko and her colleagues have been actively criticizing Yuschenko and the National Bank for blocking different mechanisms of financing the Government and in particular its work in the process of forming the Budget. I think neither the President nor the National Bank, nor the opposition will allow the Cabinet to use emission mechanisms and therefore we’ll suffer very serious consequences at the end of the year. The expert thinks that political opposition will benefit immensely from this situation having scored additional arguments against Tymoshenko. Unfortunately it might have a very negative impact on Ukrainian economy. Budgetary collapse is a very negative signal and will have dire consequences for the population, which in the state of
permanent pandemics and shock might end up without proper budgetary back up. According to the expert the fact that Ukraine is not a “clean” borrower in the eyes of IMF will send a negative message about our country to the international community.
Head of the PR Group “Polittech” Tara Berezovets does not see the possibility of agreement between Ukrainian Government branches necessary to continue cooperation with IMF. And because it was the President’s and the Party of Regions’ agenda to cease cooperation with IMF, that’s why they will not compromise and certainly will not agree to any negotiations with the third parties, namely the Government, says Berezovets. According to the expert, trust to Ukraine on the part western investors is very dependent on Ukraine’s relations with IMF. The key statement is that IMF will resume cooperation with Ukraine after the elections. In other words IMF recognizes that the obstacle for cooperation is not economic of even political situation in Ukraine, but rather, even though the name has never been said, the current president Yuschenko, thinks Mr. Berezovets. He added that the only way to implement the new law that increases the standard of living in Ukraine is to start printing more money. We are not getting any cash from IMF and on top of that we have to spend more because of inflation. Now the idea of introducing the Sate of Emergency is getting more and more reasonable - no money from IMF, budget deficit, payments dept. The situation might remain stable till February but in March we’ll experience the peak of hardship. That’s why today Yuschenko and Yanukovych will try to do everything in their power to delay elections. So that in the following months Ukraine suffers fully from the economic crisis, so that the people experience first hand budget deficit not getting paid. Who’s winning in this scenario? Yanukovych, says T. Berezovets
Director of Kiev Center for political studies and conflict sciences Mihkail Pogrebinsky thinks that, however small, the possibility of consensus still exists. Victor Yuschenko is always very attentive to what the US want from him. IMF is the US. Therefore if he gets a piece of advice to behave, he will abandon his position, says Mr. Pogrebinsky. According to the expert, the reason why IMF has denied Ukraine the fourth tranche is the latest law that increases the standards of living. One can justify the populist actions of opposition but the actions of the President who has signed this law can not be excused. It seems to me that the President should bear all of responsibility having let this piece of legislation pass, because it is in his direct interest – to create problems for the Government. Now the Government will have to find the way out of this mess because Ukrainian budget heavily depended on IMF loans. I don’t know how Tymoshenko will find the solution but she’s facing a very difficult situation, says Pogrebinksy.