IMF pulls out

Over the past two weeks what Ukraine has spent to finance its budget deficit rose by Hr 762 million (!) using IMF money, meaning that in the first quarter Ukraine has practically exhausted international finance quotas meant to last until mid-June, having consumed the hefty sum of Hr 1,430,000,000.

Remarkably, the decision to transgress the Ukrainian-IMF memorandum (whereby Hr 650 million was to be spent by the end of March, Hr 950 million by the end of June, and Hr 1.26 billion by the end of June) was made in last ten days of March (about a week before the elections, since March 21 statistics pointed to Hr 668 million worth of budget deficit spending). This desperate gesture of the Ukrainian government put international organizations into shock. In other words, talking about strains in the Ukrainian-IMF relationship would be ridiculous. The question is whether there is any relationship left?

Deputy Premier Serhiy Tyhypko was the first to rush to the scene. He was instructed to start talks with Mr. Morningstar, US Coordinator of Aid to the Newly Independent States. Among other things, the Vice Premier had to admit that the government is “generally dissatisfied with the condition of the Ukrainian economy, since there is still no growth registered in the country.” Somehow, this does not conform to the President’s statement three weeks ago to the effect that the economy has finally started on the road to revival. Such trifling discrepancies aside, what matters today is the official promise to get rigid control over budget spending, rather than save the economy. Precisely what the Vice Premier said to the US Presidential Advisor. Seemingly unaware of what had actually happened, he expressed hopes for signing extended loan programs (without specifying the amount). This must have surprised the American dignitary. In fact, Americans constantly fail to understand all the national specificities of US-Ukrainian friendship.

However, the Deputy Premier remains optimistic and now expects expanded financing through the IFF program. The sum of the loan has not yet been announced but conditions governing it are under negotiation. The IMF directors are expected to reach their verdict in about a month.

Photo by Valery Myloserdov, The Day:
In talking with the IMF the hot line doesn’t work