I was not blogging here for a long time due to some personal reasons, but also because it was rather difficult to write about the messy situation we’ve got here in Ukraine. Every day we receive a portion of new information on what’s wrong in the country. And the picture really frightens. Ukrainian economy is getting worse, national currency is falling down (starting from the last week, the price of one dollar is more that 9 hryvnias, it’s twice more than five months ago).
To save the economy Ukraine is in need of the external financing. Here is also the problem: the International Monetary Fund (IMF) refused to issue to Ukraine the second bailout of its $16,4 billion dollars (Kyiv was supposed to receive $1,864 billion on 15 February), because Ukrainian authorities failed to comply with the requirements of the Arrangement with the IMF.
As a result, all the main world rating agencies have cut Ukraine’s credit rating. Fitch Ratings cut the rating to B, the fifth-highest non-investment grade, and kept the outlook “negative”. Standard & Poor's Ratings Services cut Ukraine's foreign currency sovereign credit ratings by two notches, to CCC+/C from B/B. S&P left Ukraine's outlook negative, indicating it may reduce the ratings further. I have to remind, that the next letter after C is D, which means ‘default’. The new S&P rating for Ukraine is the lowest in Europe – one of the ‘rating colleagues’ of Ukraine is Pakistan.
Experts said that Ukraine has no chance to attract investments and receive new loans, until its relations with the IMF will not be ‘repaired’. The only country that is ready to give money to Ukrainian economy is Russia, but the interest of Moscow is the geopolitical influence and the control on some of the strategic centers of the economy – for example, the gas transport system of Ukraine, which is a key to Ukrainian and all the European energy security. Besides, there is an evidence of upcoming problems in gas area. The 7 of March is a deadline date for a new payment of Naftogaz Ukraine to Russian Gazprom. Gazprom has already warned it may cut off gas supply to Ukraine on March 8.
Coming back to the troubles of Ukrainian economy, I have to add that people who were making such a sad prognosis on the destiny of the IMF loan didn’t take to the account the fact that the IMF as an Organization is not interested in loosing of such a big borrower as Ukraine is (actually a biggest one for the current moment). The break-up of the cooperation with Ukraine would also mean for the IMF the failure of the IMF policy, which may question the appropriateness of all the system of anti-crisis measures, worked out my the IMF experts.
As a result, the IMF decided to change the tone of a dialogue with Ukraine: if the country cannot accomplish its obligations and commitments, one of the ways out is to change the rules. Ukrainian authorities were asked to write a new Letter of Intent to the IMF, listing a new set of measures, more appropriate for the today’s economy state. I wrote about this issue for one Ukrainian newspaper, and here and here are the links to my recent articles (in Russian language).
So, next week (or a bit later) the Mission of the IMF will be back to Kyiv. Ukraine may receive the second tranche of the loan in March 2009. But it will not resolve the whole problem. To deal with the essential budget deficit, Ukraine has to ask for extra-loans (back to question of Russian ambitions), or to monetize it (back to the question of a severe inflation). Let’s see, which evil will be chosen by Ukrainian authorities?
Showing posts with label IMF. Show all posts
Showing posts with label IMF. Show all posts
Monday, March 2, 2009
Monday, December 1, 2008
What’s up, Ukraine? 23-30 November 2008.
Just in case. Viktor Yushchenko was elected as official leader of his party.
On November 29 Viktor Yushchenko was formally elected as a leader of the People's Union “Our Ukraine" party. From now he may appear as “number one” in the party list for early parliamentary elections, and will have a possibility to run for a position of Prime Minister. Previously President Yushchenko had been the party's honorary chairman.
Some experts think that there are possible problems with constitutional law, since article 103 of the Constitution of Ukraine states that “the president of Ukraine cannot have any other representative mandate, or occupy a position in institutions of executive power or associations of citizens.” The law “On Associations of Citizens” defines political parties as associations of citizens.
Last warning. Yulia Tymoshenko scheduled a deadline for formation of parliamentary coalition with "Our Ukraine" - 1st of December.
”If the democratic coalition is not formed until the end of this week, we will be looking for other options and opportunities,” Prime Minister said. She also made an offer to Volodymyr Lytvyn, leader of the faction of his name, to join the probable coalition of BYT-NU-NS “to form a strengthened variant of the democratic coalition.” The BYT faction was ready to support the candidature of Mr. Lytvyn for Speaker of the Verkhovna Rada.
Both Viktor Yushchenko and Volodymyr Lytvyn refused to join the proposed “democratic coalition”. Head of Presidential Secretariat Viktor Baloha noticed on Sunday’s news evening show that “today’s ultimatums of Yulia Tymoshenko is an evidence of one thing: inconsistency. Who may sit at the table for negotiations with BYT and say that the coalition is possible after that? It is not ethical to raise a question about the return, when it was she who did everything for this coalition not to exist”.
Another space. The Ukrainian Foreign Affairs Ministry accused Viktor Yanukovych in putting his leg on the President’s ground.
On 25 November Ukraine's Foreign Ministry issued a statement on the proposal of the leader of the Party of Regions Viktor Yanukovych to establish the single economic space with Russia. Viktor Yanukovych put forward this idea at a congress of United Russia party in Moscow last week. “Since the start of talks on a comprehensive and enhanced free trade zone with the European Union, the issue of establishing a single economic space has lost its relevance," the Foreign Ministry said in a statement. The ministry emphasized that only President Viktor Yushchenko and Parliament, not party leaders, decide foreign policy priorities.
In contrary to national interests. Ukrainian hryvnia reached a new historic low on Friday.
Ukraine's currency sank to a new historic low on Friday, 28 November, at 7.5-7.6 to the dollar on the interbank market, against a low hit the previous day of 7.25-7.5. One of the conditions of the IMF 16.5 billion loan was greater currency flexibility. The National bank of Ukraine linked its official rate of hryvnia with the interbank rate.
Meanwhile, the Head of the National Bank’s Council Petro Poroshenko has accused Ukrainian authorities of the inefficient use of an IMF loan. “I may officially state that IMF resources are used very inefficiently,” he declared at a Russian-Ukrainian forum in Kiev on Friday. He also criticized authorities that agreed with the policy worked out by the IMF experts. In the opinion of Mr. Poroshenko, this policy “does not take into the account national interests of Ukraine.”
Black hole? Blackstone will consult Ukraine for 1 million euro monthly plus another 3,5 million, and all-inclusive working conditions for its experts.
Blackstone has been appointed as a financial adviser to Ukraine, highlighting the US private equity group's ambition to become the consultant of choice for countries faced with financial crisis, informs Reuters. According to a Ukraine cabinet document seen by the Financial Times, Blackstone will be paid a monthly fee of €1m ($1.26m) and a further €3.5m on completion of the contract. It will be paid all expenses, including bodyguards for staff. The contract, dated November 17, says Blackstone will co-ordinate Ukraine's $16.4bn standby loan from the International Monetary Fund, mediate between the government, the IMF and the World Bank and work on the country's stabilisation plan. It is also responsible for handling talks with Ukraine's creditors and developing a communication strategy for the stabilisation plan. The contract says Blackstone is not responsible for implementing the stabilisation plan or for its success. Blackstone's team of advisers to Ukraine is being led by Martin Gudgeon.
Charity first. Kateryna Yushchenko is on the visit to United States.
The first lady of Ukraine was visiting Pittsburgh hospitals at the end of last week – to gather some ideas that she can take back to her home country. Mrs. Yushchenko heads the supervisory board of the Ukraine 3000 International Charitable Foundation, which works with hospitals around the world to improve pediatric care in Ukraine. “She is coming basically to do work for her foundation, to see what can be done to help the hospitals in Ukraine,” said Luba Hlutkowsky, chairwoman of the board of directors of Pittsburgh Ukrainians, according to the local press.
More than 3,000 people in Pittsburgh – about 1 percent of the city's population – claim Ukrainian heritage. Kateryna Yushchenko, 47, was born in Chicago to Ukrainian immigrants. She moved to Kiev in 1991 and became a Ukrainian citizen in 2005, the year that her husband was elected president.
On November 29 Viktor Yushchenko was formally elected as a leader of the People's Union “Our Ukraine" party. From now he may appear as “number one” in the party list for early parliamentary elections, and will have a possibility to run for a position of Prime Minister. Previously President Yushchenko had been the party's honorary chairman.
Some experts think that there are possible problems with constitutional law, since article 103 of the Constitution of Ukraine states that “the president of Ukraine cannot have any other representative mandate, or occupy a position in institutions of executive power or associations of citizens.” The law “On Associations of Citizens” defines political parties as associations of citizens.
Last warning. Yulia Tymoshenko scheduled a deadline for formation of parliamentary coalition with "Our Ukraine" - 1st of December.
”If the democratic coalition is not formed until the end of this week, we will be looking for other options and opportunities,” Prime Minister said. She also made an offer to Volodymyr Lytvyn, leader of the faction of his name, to join the probable coalition of BYT-NU-NS “to form a strengthened variant of the democratic coalition.” The BYT faction was ready to support the candidature of Mr. Lytvyn for Speaker of the Verkhovna Rada.
Both Viktor Yushchenko and Volodymyr Lytvyn refused to join the proposed “democratic coalition”. Head of Presidential Secretariat Viktor Baloha noticed on Sunday’s news evening show that “today’s ultimatums of Yulia Tymoshenko is an evidence of one thing: inconsistency. Who may sit at the table for negotiations with BYT and say that the coalition is possible after that? It is not ethical to raise a question about the return, when it was she who did everything for this coalition not to exist”.
Another space. The Ukrainian Foreign Affairs Ministry accused Viktor Yanukovych in putting his leg on the President’s ground.
On 25 November Ukraine's Foreign Ministry issued a statement on the proposal of the leader of the Party of Regions Viktor Yanukovych to establish the single economic space with Russia. Viktor Yanukovych put forward this idea at a congress of United Russia party in Moscow last week. “Since the start of talks on a comprehensive and enhanced free trade zone with the European Union, the issue of establishing a single economic space has lost its relevance," the Foreign Ministry said in a statement. The ministry emphasized that only President Viktor Yushchenko and Parliament, not party leaders, decide foreign policy priorities.
In contrary to national interests. Ukrainian hryvnia reached a new historic low on Friday.
Ukraine's currency sank to a new historic low on Friday, 28 November, at 7.5-7.6 to the dollar on the interbank market, against a low hit the previous day of 7.25-7.5. One of the conditions of the IMF 16.5 billion loan was greater currency flexibility. The National bank of Ukraine linked its official rate of hryvnia with the interbank rate.
Meanwhile, the Head of the National Bank’s Council Petro Poroshenko has accused Ukrainian authorities of the inefficient use of an IMF loan. “I may officially state that IMF resources are used very inefficiently,” he declared at a Russian-Ukrainian forum in Kiev on Friday. He also criticized authorities that agreed with the policy worked out by the IMF experts. In the opinion of Mr. Poroshenko, this policy “does not take into the account national interests of Ukraine.”
Black hole? Blackstone will consult Ukraine for 1 million euro monthly plus another 3,5 million, and all-inclusive working conditions for its experts.
Blackstone has been appointed as a financial adviser to Ukraine, highlighting the US private equity group's ambition to become the consultant of choice for countries faced with financial crisis, informs Reuters. According to a Ukraine cabinet document seen by the Financial Times, Blackstone will be paid a monthly fee of €1m ($1.26m) and a further €3.5m on completion of the contract. It will be paid all expenses, including bodyguards for staff. The contract, dated November 17, says Blackstone will co-ordinate Ukraine's $16.4bn standby loan from the International Monetary Fund, mediate between the government, the IMF and the World Bank and work on the country's stabilisation plan. It is also responsible for handling talks with Ukraine's creditors and developing a communication strategy for the stabilisation plan. The contract says Blackstone is not responsible for implementing the stabilisation plan or for its success. Blackstone's team of advisers to Ukraine is being led by Martin Gudgeon.
Charity first. Kateryna Yushchenko is on the visit to United States.
The first lady of Ukraine was visiting Pittsburgh hospitals at the end of last week – to gather some ideas that she can take back to her home country. Mrs. Yushchenko heads the supervisory board of the Ukraine 3000 International Charitable Foundation, which works with hospitals around the world to improve pediatric care in Ukraine. “She is coming basically to do work for her foundation, to see what can be done to help the hospitals in Ukraine,” said Luba Hlutkowsky, chairwoman of the board of directors of Pittsburgh Ukrainians, according to the local press.
More than 3,000 people in Pittsburgh – about 1 percent of the city's population – claim Ukrainian heritage. Kateryna Yushchenko, 47, was born in Chicago to Ukrainian immigrants. She moved to Kiev in 1991 and became a Ukrainian citizen in 2005, the year that her husband was elected president.
Thursday, November 13, 2008
Parliament of Ukraine: The Headless Horseman
Speaker of Ukrainian Parliament Arseniy Yatseniuk was dismissed on 12 November. New Head of the Parliament has not been elected yet. Ukrainian parliamentary democracy – and a country Ukraine as a whole – is now again on the political hook. Analysing current situation I’ve got at least 14 conclusions:
1. As for today in the Parliament of Ukraine does exist a kind of “technical coalition”, which actually dismissed Speaker Yatseniuk.
2. This “technical coalition” consists of the factions of the Party of Regions (175 Members of Parliament), the Communist Party (27 MPs), the Block of Volodymyr Lytvyn (20 MPs), and also of a part of pro-presidential faction “Our Ukraine – People’s Self-Defence” (OU-PS), loyal to Head of the Secretariat of President Viktor Baloha (10 MPs; total size of faction – 72 MPs), plus at least 1 MP from the Block of Yulia Tymoshenko (BYT, total size of faction – 156 MPs).
Total: 233 MPs.
3. Only 217 of MPs didn’t vote for the Speaker’s dismissal. It is not enough to build an “alternative” coalition.
4. Despite of all the controversial info on alleged quarrel between President Yushchenko and Head of his staff Viktor Baloha, Viktor Yushchenko was definitely involved in taking the decision on the future of Arseniy Yatseniuk.
5. At least, Viktor Yushchenko did know that the Speaker was to be dismissed. Otherwise Mr. Baloha would not be a Chief of President’s Secretariat anymore.
6. Viktor Baloha may lose his post after signing the coalition treaty with the mentioned group of factions leaded by the Party of Regions. But it will not mean that President is against this coalition.
7. The “technical coalition” may stay only “technical” or “situational”, and may never be legalised. As to my mind, a new coalition treaty will not be signed in the mentioned format, but all the “company” may vote synchronically on previously discussed and agreed questions.
8. The “technical coalition” will elect so-called “Technical Speaker” to make the results of their votes legitimate. (As only Head of the Parliament have a right to sign laws adopted by the Parliament).
9. The formation of technical or real coalition without BYT does not mean an inevitable dismissal of the Government and Prime Minister Yulia Tymoshenko. It’s easy to blame her in all the negative consequences of economy crisis and to harm her rating for future (current) presidential race.
10. Using a well known in Ukraine word combination “I’m leaving (this post. – T.V.) to be back”, previously used by Presidents Leonid Kuchma and Viktor Yushchenko, ex-Speaker Arseniy Yatseniuk have declared his presidential ambitions. But they are unlikely to be realised in a nearest future.
11. Yulia Tymoshenko already blamed President for a “betrayal” and for a “final ruining of any hope on a democratic coalition revival”. There at least two ways for her now: to make a “technical arrangement” with a “technical coalition”, and to stay in power or to fight with the Party of Regions and their new friends publicly, which will lead to resignation of the Government.
12. Third way, profitable for Julia Tymoshenko – snap parliamentary election. Her recent rhetoric (as well as the statements of members of BYT) shows that she may choose this way, trying to look as an innocent victim of President’s game.
13. Early parliamentary elections are inevitable. But the poll will definitely not happen this year. All the politicians need time for more populism.
14. Ukraine is in urgent need of a new generation of politicians to overcome “dirty game” tendencies, deep-rooted in Ukrainian politics.
1. As for today in the Parliament of Ukraine does exist a kind of “technical coalition”, which actually dismissed Speaker Yatseniuk.
2. This “technical coalition” consists of the factions of the Party of Regions (175 Members of Parliament), the Communist Party (27 MPs), the Block of Volodymyr Lytvyn (20 MPs), and also of a part of pro-presidential faction “Our Ukraine – People’s Self-Defence” (OU-PS), loyal to Head of the Secretariat of President Viktor Baloha (10 MPs; total size of faction – 72 MPs), plus at least 1 MP from the Block of Yulia Tymoshenko (BYT, total size of faction – 156 MPs).
Total: 233 MPs.
3. Only 217 of MPs didn’t vote for the Speaker’s dismissal. It is not enough to build an “alternative” coalition.
4. Despite of all the controversial info on alleged quarrel between President Yushchenko and Head of his staff Viktor Baloha, Viktor Yushchenko was definitely involved in taking the decision on the future of Arseniy Yatseniuk.
5. At least, Viktor Yushchenko did know that the Speaker was to be dismissed. Otherwise Mr. Baloha would not be a Chief of President’s Secretariat anymore.
6. Viktor Baloha may lose his post after signing the coalition treaty with the mentioned group of factions leaded by the Party of Regions. But it will not mean that President is against this coalition.
7. The “technical coalition” may stay only “technical” or “situational”, and may never be legalised. As to my mind, a new coalition treaty will not be signed in the mentioned format, but all the “company” may vote synchronically on previously discussed and agreed questions.
8. The “technical coalition” will elect so-called “Technical Speaker” to make the results of their votes legitimate. (As only Head of the Parliament have a right to sign laws adopted by the Parliament).
9. The formation of technical or real coalition without BYT does not mean an inevitable dismissal of the Government and Prime Minister Yulia Tymoshenko. It’s easy to blame her in all the negative consequences of economy crisis and to harm her rating for future (current) presidential race.
10. Using a well known in Ukraine word combination “I’m leaving (this post. – T.V.) to be back”, previously used by Presidents Leonid Kuchma and Viktor Yushchenko, ex-Speaker Arseniy Yatseniuk have declared his presidential ambitions. But they are unlikely to be realised in a nearest future.
11. Yulia Tymoshenko already blamed President for a “betrayal” and for a “final ruining of any hope on a democratic coalition revival”. There at least two ways for her now: to make a “technical arrangement” with a “technical coalition”, and to stay in power or to fight with the Party of Regions and their new friends publicly, which will lead to resignation of the Government.
12. Third way, profitable for Julia Tymoshenko – snap parliamentary election. Her recent rhetoric (as well as the statements of members of BYT) shows that she may choose this way, trying to look as an innocent victim of President’s game.
13. Early parliamentary elections are inevitable. But the poll will definitely not happen this year. All the politicians need time for more populism.
14. Ukraine is in urgent need of a new generation of politicians to overcome “dirty game” tendencies, deep-rooted in Ukrainian politics.
Sunday, October 26, 2008
IMF Announces Agreement with Ukraine on US$16.5 Billion Loan
The International Monetary Fund announces outline plans to lend $16.5 billion to Ukraine to support a policy package the country has assembled to maintain economic and financial stability. Ukraine's economy has been affected by the global financial turmoil and falling steel prices.
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement on Ukraine today:
"An IMF staff mission and the Ukraine authorities have today reached agreement, subject to approval by IMF Management and the Executive Board, on an economic program supported by an SDR 11 billion (US$16.5 billion) loan under an 24-month Stand-By Arrangement. Consideration by the Board would follow approval of legislative changes to Ukraine's bank resolution program.
"Ukraine has developed a comprehensive policy package designed to help the country meet the balance of payments needs created by the collapse of steel prices, and the global financial turmoil and related difficulties in Ukraine's financial system. The authorities' program is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation. At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible.
"The IMF is moving expeditiously to help Ukraine, and this program is focused on the essential upfront measures needed to maintain confidence and economic and financial stability. The strength of the program justifies the high level of access, equivalent to 800 percent of Ukraine's quota in the Fund," Mr. Strauss-Kahn added.
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement on Ukraine today:
"An IMF staff mission and the Ukraine authorities have today reached agreement, subject to approval by IMF Management and the Executive Board, on an economic program supported by an SDR 11 billion (US$16.5 billion) loan under an 24-month Stand-By Arrangement. Consideration by the Board would follow approval of legislative changes to Ukraine's bank resolution program.
"Ukraine has developed a comprehensive policy package designed to help the country meet the balance of payments needs created by the collapse of steel prices, and the global financial turmoil and related difficulties in Ukraine's financial system. The authorities' program is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation. At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible.
"The IMF is moving expeditiously to help Ukraine, and this program is focused on the essential upfront measures needed to maintain confidence and economic and financial stability. The strength of the program justifies the high level of access, equivalent to 800 percent of Ukraine's quota in the Fund," Mr. Strauss-Kahn added.
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