Friday, December 18, 2009

Will get it or will not get it? That is a question!

Kyiv (UNIAN) Ukraine has made an urgent appeal to the International Monetary Fund for about $2bn in emergency loans to ease “an extremely difficult situation” in meeting its external obligations and avoid the danger of a “spill-over effect” on other economically vulnerable states.
“The next three months are crucial,” Hryhoriy Nemyria, Ukraine’s deputy prime minister, told the Financial Times one day after returning from a mission to the IMF’s headquarters in Washington.
“Wait and see is not an option. The cost of inaction is greater than the cost of action and may aggravate the situation in the wider region.”
Mr Nemyria’s warning seems aimed at putting public pressure on the IMF, the US and the European Union at a difficult time in financial markets. Concern about the stability of emerging economies has been aggravated by the turmoil surrounding Dubai, following Dubai World’s surprise decision to seek a debt restructuring.
Brussels is also worried about the security of EU natural gas imports from Russia, following last winter’s Moscow-Kiev dispute and supply disruption.
Mr Nemyria declined to say whether Ukraine would be forced into default without immediate fresh IMF support. But he said it would be “extremely difficult” for the government to pay state salaries and pensions or to cover foreign obligations, including, crucially, monthly payments to Russia.
“It would be a fatal mistake if we recreate the risk of destabilising the situation,” he said.
Ukraine is Europe’s most troubled large economy, with gross domestic product contracting 15 per cent this year. It has been in economic turmoil since mid-2008, when the global economic crisis struck, forcing the country to turn to the IMF and European Union for support.
The Fund has paid out $11bn of a $16.4bn programme, keeping Kiev financially afloat, but two months ago it suspended a fourth $3.8bn disbursement after Ukraine failed to implement key economic reforms, including a tough 2010 budget.