The West will shortly decide on financial support of Ukraine

A day before leaving office, Premier Valery Pustovoitenko declared that he counts on a positive IMF ruling concerning the next loan installment: “We are doing everything possible for this. We are ready to do everything necessary for further reform in the economy, and we will do so without fail. I said so a year ago, last July and August, and I am saying this again; we will surely do so.” The Premier is quoted by Ukrayinski Novyny.

Meanwhile saying the same thing endlessly does not always help. Ukraine is expected to make specific steps.

“The IMF mission visiting Ukraine may take a dim view of how the government has been carrying out the extended financing program; this, in turn, may result in further delayed IMF loans,” Deputy Premier Serhiy Tyhypko told a news conference on November 28. “If the mission does not get answers to its questions it will leave with negative findings and this will clearly mean no money. At this stage I cannot say that we have a good hand to play. It is bad so far.” This author is not inclined to regard this prediction by the Deputy Premier for the economy only from the standpoint of his chances to head the government. It is obviously based on objective considerations.

According to Mr. Tyhypko, the IMF requirements still to be implemented include municipal costs that are low, the effect of the sunflower seeds export tax, and the excessive budget deficit. The Vice Premier noted that the government is actively looking for ways to solve these problems, adding that IMF will require real solutions.

Gregory Jedrzejczak, head of the World Bank office in Ukraine, told Interfax Ukraine that same day: “World Bank assistance will depend on Ukraine’s progress in is carrying out reforms. If there is no reform there will be zero assistance,” he stressed, adding that Ukraine still has not even approved the administrative reform bill.

Naturally, the government was too busy with the presidential campaign, but immediately afterward the Cabinet was faced with the specter of default, forcing it to look for new creditors to return to the old ones. Nevertheless this specter is becoming more real, so the government is considering even the possibility of a “soft default,” although apparently there are no reasons to count on concessions. Mr. Tyhypko suggested that such concessions are practically impossible. There is a more realistic alternative: issue of privatization bonds to service the public debt. Interfax Ukraine, quotes Mr. Jedrzejczak as saying, “Eurobonds are not that easy to restructure (Ukraine must pay some DM 250 million on February 28, on account of the third eurobond coupon maturing in 2001 — Ed. ). No one has made any such restructuring as yet.”