Ukraine, IMF may sign $15 billion loan - PM

16:40, 21 October 2008
887 0

Ukraine may sign a loan worth as much as $15 billion with the International Monetary Fund next week as it seeks to inject cash into domestic banks and avoid an economic meltdown, Prime Minister Yulia Tymoshenko said, Bloomberg reported.

Talks about the loan are ``90 percent`` completed, Tymoshenko said at a press conference in the Ukrainian capital Kiev today. Once signed, the pact will need to be approved by lawmakers.

``The talks are almost finished with the IMF and we`ve almost agreed on what necessary changes to laws we have to make to get the loan,`` Tymoshenko said.

Ukraine is struggling to keep the hryvnia from falling and its banks from running out of cash as emerging market economies in eastern Europe increasingly feel the pinch of the global economic crisis. The situation in Ukraine is exacerbated by the fastest inflation in Europe and a split in the coalition that has stalled budget talks and forced early elections in December.

Ukraine joins Hungary and Iceland, whose three largest banks collapsed this month, in lining up potential IMF funding.

The hryvnia weakened for a fifth consecutive day against the dollar today. The currency dropped 0.4 percent to 5.5200 per dollar by 11:18 a.m. in Kiev, from 5.4975 late yesterday. It earlier fell to 5.5500, the lowest level against the dollar since Oct. 9.

Early Elections

Tymoshenko’s alliance today physically blocked Parliament`s meeting hall, hampering a vote on financing early elections. Yesterday, Yushchenko put off the date for early elections he has called to Dec. 14 from Dec. 7.

The political tousling and economic instability has led ratings organizations to change their outlooks for Ukraine.

Moody`s Investors Service yesterday lowered Ukraine`s foreign- and local-currency debt ratings to stable from positive. Fitch Ratings dropped the former Soviet republic`s credit rating to B+ on Oct. 17 and Standard & Poor`s put the country on review for downgrades on Oct. 15.

Tymoshenko said that the economic instability means the government needs to trim the budget deficit immediately.

``Ukraine will have to tame its social appetites,`` she said. ``We will have to cut spending that Ukraine cannot now afford.``


If you see a spelling error on our site, select it and press Ctrl+Enter