Publication: Monitor Volume: 5 Issue: 27

Ukraine’s chief banker, Viktor Yushchenko, was visibly disappointed on his return from the almost week-long negotiations with the International Monetary Fund (IMF) and the World Bank in Washington on resumption of loans to Ukraine. In a television interview which he gave on landing in Boryspil airport near Kyiv on February 7, Yushchenko said that the task this year is to persuade the IMF to extend over US$600 million to Ukraine, and to get “slightly more” from the World Bank. Yushchenko complained that the international financial institutions base their assessment of Ukrainian reforms on information “from not-too-reliable sources”–“representatives of different parties and factions” and low-level government officials. Yushchenko said he is confident that the IMF will continue disbursing tranches to Ukraine, according to the earlier approved Extended Fund Facility [EFF] program. Ukrainian Finance Minister Ihor Mityukov, who had returned from Washington earlier, said in a television interview that Ukraine may receive much less than it had expected from the IMF this spring, namely two rather three EFF tranches, a total of some US$150 million (1st Channel, Inter TV, February 7). Yushchenko and Mityukov had accompanied Ukrainian Premier Valery Pustovoytenko on his visit to Washington. Last week, Pustovoytenko said that IMF Managing Director Michel Camdessus assured him that the IMF will soon resume the EFF program (see the Monitor, February 3; ITAR-TASS, February 4).

At a press conference yesterday, Yushchenko said that the National Bank of Ukraine will gradually liberalize currency regulations to comply with the IMF demands. Today, Ukraine announced a change of the fixed currency exchange rate band from 2.5-3.5 to 3.4-4.6 hryvnyas per U.S. dollar, effectively devaluing the national currency (Ukrainian television and agencies, February 8; Inter TV, February 9). The rate of four hryvnyas per dollar had been taken as the basis for calculating the 1999 state budget. The government will now have a hard time balancing budget revenues and expenditures. It is generally expected that the IMF will decide whether to continue funding Ukraine in early March. The IMF allotted to Ukraine US$335 million last autumn, but then suspended the EFF because Kyiv was slow in its reforms and did not comply with IMF conditions. –OV