Ukraine's plea for $2bn loan refused by IMF- FT

14:18, 24 December 2009
2458 0

But officials said...

The International Monetary Fund has turned down recession-battered Ukraine`s plea for a $2bn emergency loan before next year, a senior Ukrainian official said yesterday, citing his country`s failure to adopt a fiscally prudent 2010 budget and muster political consensus before the presidential election, according to Financial Times.

But officials said the financially stretched government had other options that might allow it to get through the coming months, to help pay gas import bills to Russia`s Gazprom as well as citizens` pensions and wages. That could include IMF authorisation for the release of $2bn (?1.4bn, £1.25bn) in funds from Kiev`s central bank reserves to the government account.

Ihor Umansky, Kiev`s fin-ance minister, said Ukraine could revive negotiations with the IMF early next year but "it will be impossible before the end of the year" to receive a fresh IMF disbursement.

The IMF said it was "continuing discussions" with Ukraine`s authorities, adding that -further support could "go forward" after "broad political support" was demonstrated. It provided $11bn in aid this year to keep Kiev financially afloat amid a 15 per cent drop in gross domestic product, but froze assistance in November because of lack of reform and political infighting.

Kiev`s political leaders are bitterly divided, with Viktor Yushchenko, president, Yulia Tymoshenko, prime minister, and expremier Viktor Yanukovich all campaigning for a January 17 presidential election.

Without fresh funds, officials say, they might struggle to cover gas import bills, threatening a repeat of last January`s stand-off with Russia that disrupted European supplies. Officials have warned that Kiev`s financial woes could "spill over" into Europe, whose banks hold a 40 per cent market share in Ukraine.

Alexander Ginzburg, an adviser to Ms Tymoshenko, said her government was in "a tough situation" but could still manoeuvre to meet financial obligations.

By Roman Olearchyk, Financial Times

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