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This, however, did not prevent Mr. Michel Camdessus, IMF executive director, from stating last week that the world financial crisis is already past its peak. His optimistic analysis is based on the assumption that the world's leading economic powers "look fit," that the situation in Asia is apparently improving, just as Brazil is stepping up its macroeconomic policy. He further stressed that the situation in the crisis-stricken countries is improving precisely due to their efforts in carrying out daring reforms. Apart from Thailand and Peru, he addressed words of praise to the Philippines and Indonesia among the 60 countries engaged in IMF reformist programs. In his speech at the Foreign Political Association Mr. Camdessus noted that the world financial system must be based on solid national financial institutions relying on the international regulation and control criteria.

The latter is perhaps one of few postulates that all of the critics of IMF programs would support unreservedly, including George Soros and Geoffrey Sachs. Mr. Soros in an interview with the Polish magazine Wprost unequivocally attributed today's favorable economic status (last year's 5% production decline notwithstanding) to a well-balanced, pragmatic, and most importantly Poland's own economic policy.

There are, however, essential differences in the IMF and George Soros's approaches. Mr. Soros has on more than one occasion suggested that the Fund act as the world's central bank. In his opinion, if it agreed to act as the "ultimate credit authority" this would considerably improve what he calls a chronically unstable world economy. However, the IMF declines the privilege, as do the US Treasury Department and Federal Reserve System. Last Wednesday, the Bloomberg Agency informed, referring to Michel Camdessus, that the International Monetary Fund has no intention to assume the world's central bank's or ultimate crediting authority's responsibility; in other words, it will not make any tangible changes in the established practice of aiding countries in distress.

In fact, views on IMF's missionary activities still differ. Geoffrey Sachs, Director of the Harvard Institute of International Development, believes that "the International Monetary Fund's dealings with Brazil in the past two years constitute a textbook failure in monetary management," adding that the IMF and US and Brazilian governments developed a totally ineffective stabilization program based on sustaining a fixed exchange rate. Moreover, he is confident that IMF often impedes efforts to revive a healthy financial system in an unstable economic environment.

This debate in a narrow circle made up by world-caliber financiers may seem to have nothing to do with Ukraine. In reality, Ukraine will continue to personify that "textbook failure," at least this year, largely because it does not have an economic program of its own. All it can do is repeat others' mistakes. One of the latter, according to Mr. Sachs, is the adherence to a fixed exchange rate without any "macroeconomic" motivation.

The National Bank of Ukraine resumed devaluation of the hryvnia at the Ukrainian Interbank Monetary Exchange on February 11 as per accords with IMF. For three previous months the rate stayed at 3.4270 UAH/USD. In February it dropped by 4.55%. Feeling around for the so-called equilibrium rate, the National Bank broadened the rate fluctuations margin from 5 to 10% last week, but it is too early to say whether this measure will effective. Judging by devaluation anticipation, it is still a long way to hryvnia deficit and stoppage of its decline.

NBU specialists, alongside cheapening the national currency, make every effort to reduce spare cash in bank accounts. The first several dozen most maladroit banks as possible victims became known last week; they were unlucky as they failed to secure support from the government or moneyed partners in last year's financial disquiet. They should have known better as did Privatbank. Indeed, the Cabinet owed the latter a sizable amount of money in terms of domestic government bonds and then actually refused to pay, yet this did not dampen the bank's honorary president's optimism, a trait seen rarely these days.

Oleksandr Dubilet, Chairman of the Board, must be confident about the bank's future and this allows him to view the entire banking system with a remarkable enthusiasm. "Today not all but many banks have enough liquidity reserves to survive any unwelcome shifts on the exchange market. I don't think that the banks will show aggressiveness in the investment sphere this year. Of course, they will proceed with active operations, but their orientation will change in terms of both quantity and quality," he says. Indeed, NBU's tactic of slow and controlled devaluation of the hryvnia will enable large banks to adjust to inflation revenues. And the dropout rate will be portrayed as "strengthening the banking system," which is also in conformity with IMF requirements.

Now the Cabinet's tactic is a different story. Double standards prevail here as previously. The President's Press Secretary Oleksandr Martynenko announced another "correction" in economic policy on February 24. Referring to certain new conditions in taxing Ukrainian enterprises supposed to stimulate their performance, he declared, "I don't think that any special edict is necessary to enforce this reorientation. Most decrees of the President are aimed in precisely this direction. I think that, in order to really protect Ukrainian enterprises, the least we could do is concentrate on the new taxation conditions and other methods of stimulating their economic activity and financing priority projects." In reality, this will probably mean new taxes and duties like those decreed by the President last week. On February 23, Leonid Kuchma signed an edict on additional payments to the Pension Fund: a duty in the amount of 1% of the cost of immovables purchased by legal entities and natural persons, and one in the amount of Hr 10.00 per mobile phone sold by system operators.

The Cabinet is preparing "special measures" to increase budget incomes to pay back wages at budget-sustained organizations, Premier Valery Pustovoitenko told a news conference, adding that "We are working very actively in this direction, developing special measures. Today (i.e., February 25 - Ed.) I am holding a special meeting [on the subject]." Those who may have forgotten exactly how Mr. Pustovoitenko resolves such issues should be reminded that exacting debts and tax payments usually takes place behind closed (and guarded) doors or on military testing grounds, mainly using psychological pressure. Otherwise, using legally established transparent procedures, exacting debts would hurt his own people, causing their bankruptcy.

Toward the end of last year, when IMF suspended the program of cooperation with the Ukrainian government, some naive observers took this as evidence that the Fund had finally understood the Cabinet's actual political and economic preferences. Now, after three months of negotiating mutual concessions, and especially after the Premier's assurances that Ukraine has to carry out the remaining two of the IMF requirements to resume financing, one can only agree with Prof. Sachs's diagnosis of the Fund.

A month ago, answering his own question why IMF had become a participant in such a devastating and ineffective policy (in Brazil where the situation is dramatically reminiscent of the one we have in Ukraine), he stated: "First, the IMF and the US Treasury have listened far too much to Wall Street importunings since the mid-1990s. US investors wanted to get their money out of Russia and Brazil without devaluation losses. Second, the IMF believes it can outsmart the market, when in fact the market is outsmarting the IMF... Third, as an anti-inflation zealot, the IMF coolly accepts deep recessions (and economic degradation - Ed.) if it thinks that the output collapse will save a few percentage points on the price level. Last, the IMF remains impervious to criticism."

By Iryna KLYMENKO, The Day