Publication: Monitor Volume: 5 Issue: 54

Yesterday the International Monetary Fund’s (IMF) managers recommended that the IMF board, which is scheduled to meet by the end of March, resume the US$2.2 billion Extended Fund Facility (EFF) program for Ukraine. If the board does resume the program, Ukraine will probably receive the first tranche of an IMF loan worth over US$150 million and loans totaling some US$200 million from the World Bank in April. President Leonid Kuchma welcomed this prospect, saying that a continuing cooperation with the IMF will mean stability for Ukraine. Several hours later, however, the Ukrainian parliament–by a vote of 232 to 18–amended the law on prices, effectively reintroducing the moratorium on increases in public utility rates, which was canceled by the Constitutional Court earlier this month. The moratorium, introduced by the parliament last year, seriously hampered a normal market price formation, and was one of the reasons behind the suspension of the EFF last November. The lawmakers, on the initiative of the leftist factions, ruled yesterday that the prices on housing utilities and public transport cannot be raised until all the wage and pension arrears are paid in full. Socialist leader Oleksandr Moroz made it clear that the amendments were introduced in defiance of the IMF. He alleged that the Constitutional Court ruling was instigated by Kuchma, who is “dependent on international organizations, in particular, the IMF” (AP, Ukrainian television and agencies, March 17, see also the Monitor, March 15).

Reintroducing the moratorium on increasing the utility and transport tariffs would have considerably spoilt Ukraine’s chances of receiving further aid from the IMF and the World Bank, undermining its current fragile financial stability. Kuchma has no choice but to veto the parliament decision, which will inevitably affect his chances to be reelected president, making him less popular with the electorate. The Ukrainian president, speaking in Kharkiv yesterday morning, noted that, with the elections approaching, the relations between him and the populist legislature will only worsen. He said that the parliament, in which his several potential presidential rivals are sitting, will not be capable of making responsible decisions until after the elections (UNIAN, March 17). –OV