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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Ukraine Exchanges Creditors

15 December, 1998 - 00:00


The IMF mission left Kyiv without fixing a date for the second EFF
installment ($78 million) promised earlier. It is known, however, that
IMF will again "ponder" its credit cooperation with Ukraine after the 1999
budget is adopted. As it was, according to Presidential Aide Valery Lytvytsky,
both sides had "a wide exchange of ideas concerning budget policy."

IMF's major requirement is a balanced budget in which the income items
tally with the expenditures. Ukraine, like Russia, does not stand much
of a chance to live up to this. Weak budget revenues, arrears on social
payments, no structural reform - the IMF mission saw all this when analyzing
the budget program. The Ukrainian leadership is aware of the situation,
of course, but knowledge alone, without taking proper steps, will not refill
budget coffers.

Once again the Cabinet started the lower hryvnia rate tune. About ten
days ago the President let it slip that the Ukrainian people might receive
a Christmas "gift": a floating rate. The Inter-Bank Currency Exchange responded
at once with demand for dollars outstripping the supply. In a word, the
prospects for further IMF-Ukrainian cooperation are rather vague, although
the mission promised additional talks several weeks from now.

In this context it seems interesting to analyze the latest statements
made by the World Bank's Ukrainian and Belarusian manager Paul Siegelbaum.
He said, in part, that it is time to replace short-term programs by medium-
and long-term ones. "We kept in the IMF's shadow, but now we are going
to add Ukrainian projects to our portfolio," he added. However, at a news
conference in Kyiv on December 7 Mr. Siegelbaum declared: "If the IMF holds
back the next loan installment we will also wait with the next transfer."
Are the creditors uniting? Ukraine expects to receive four loans from the
World Bank in December totaling $70 million (the loan approved in September
amounts to $900 million).

PS: Word being spread in Kyiv about Ukraine having talked the IMF
into carrying out a $1.5 billion emission has not been confirmed. No emission
is evident from the National Bank's figures.


 

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