In the aftermath of the IMF decision to freeze its next tranche to Ukraine, Prime Minister Viktor Yushchenko reacted in his typically optimistic vein, saying his government will be able to meet all the necessary guidelines by the IMF Council of Governors session scheduled for March 28. According to Yushchenko, “There are four or five merely structural demands,” Interfax-Ukraine reports.
To support this thesis, the leader of advisors to the prime minister, Valery Lytvytsky, called a press conference the Friday before last, saying, “Nothing has happened to allow to speak of a failure in our relations with the IMF.” He added that the January $187 million installment should have been released automatically based on the performance of the Ukrainian economy from December 19, 2000 through January 19, 2001, assuring his listeners that the resulting two-month break “will not be critical for Ukraine,” the IMF demands are not insurmountable, and Ukraine can meet them. He does not share the views of those who oppose working with the IMF and other international financial organizations and declared, “Why should we reject money which is not subject to inflation? This is good money.” Lytvytsky believes there is a good chance for Ukraine to enter international financial markets in the near future but with its poor ratings Ukrainians cannot count on anything. The ratings, he stressed, depend expressly on the state of Ukraine’s relationships with the IMF and the World Bank. Future talks with the Paris Club of creditors on restructuring the $500 million debt, he maintained, could become a major argument in favor of closer links with the IMF. The group of Ukrainian negotiators to the talks has been decided upon, and the action plan is ready, he confirmed. Lytvytsky disagrees with those who think that Ukraine has lost its chance for successful talks with the Paris Club due to the IMF’s uncompromising stand. On the contrary, he asserted, there are “positive signals from the IMF and the Paris Club.”
Meanwhile, Deputy Chairman of the National Bank of Ukraine Council of Governors and People’s Deputy Petro Poroshenko claims the subtext of the IMF decision is more political than economic. He believes that Ukrainian legislation is quite compatible with earlier IMF demands and recommendations, in particular the law on payments. Poroshenko states, “The IMF representatives should be aware that under this law the only bad debts that can be written off are those which will defray enterprises’ clearing accounts and enable entities to operate in the legal economy, pay taxes, in other words, to work in a civilized and transparent way,” UNIAN reports.
In a related move, People’s Deputy Serhiy Teriokhin argues that the IMF’s last mission to Ukraine was politically biased, saying, “There are no economic problems between Ukraine and the IMF, there are only political ones.” According to him, the fringe issue of cutting the existing 23% export duty on sunflower seeds has assumed unduly major proportions, with the IMF insisting that Ukraine is consciously curbing its hard currency export revenues by imposing restrictions on the export of sunflower seeds. Ukraine, argues Teriokhin, also exports sunflower oil, a much larger export earner than the seeds: “The share of vegetable oil in Ukraine’s total export is a mere 0.08%. So what’s the issue here?”
