UPDATE 2-IMF to start negotiations with Ukraine on aid program
By Anna Yukhananov
WASHINGTON, March 13 (Reuters) – An International Monetary
Fund team in Kyiv will begin negotiations with Ukrainian
authorities about an economic reform program, the IMF’s chief
said on Thursday.
“Following an informal briefing today of the IMF’s executive
board, (IMF) management has asked the team to stay in (Kyiv) and
begin a process of negotiation,” IMF Managing Director Christine
Lagarde said in a statement. She said the mission should finish
its work by March 21.
The IMF team has been in Kyiv since March 4 to gather data
about the government’s finances, and Lagarde met with Ukrainian
Prime Minister Arseny Yatseniuk on Wednesday.
Officials in Ukraine, where pro-European politicians have
taken charge after Russian-backed President Viktor Yanukovich
was toppled in February following months of demonstrations, have
said the country is nearing bankruptcy.
IMF support is widely seen as critical to Kyiv’s finances
and to getting its economy on a growth track. Ukrainian
officials have asked the IMF for at least $15 billion in
assistance. IMF spokesman Gerry Rice said on Thursday it was too
early to discuss specific figures.
“The team will work with the Ukrainian authorities to
develop an economic reform program that will result in sound
economic governance and sustainable growth, while protecting the
vulnerable in society, and that can be supported by the IMF in
accordance with its policies,” Lagarde said.
IMF aid programs typically are accompanied by stringent
conditions to ensure that a country will be able to fix its
economy and make it grow. Canada, the European Union, the United
States and other countries have promised to support Ukraine if
an IMF program is put into place.
However, U.S. lawmakers are unlikely to vote on a Ukraine
aid bill until later this month, held up by debates on whether
IMF reforms should be included in the package.
The IMF’s last loan program to Ukraine for $15 billion went
awry when the government failed to implement reforms.
In the past, the IMF has asked Kyiv to cut its large fiscal
deficit, float its exchange rate, and phase out costly energy
subsidies. Similar conditions are expected to be attached to any
new IMF bailout package.
But some analysts have questioned the new government’s
ability to carry out unpopular reform measures. Ukraine’s new
government is dealing with political turmoil, including the
possible annexation of the Crimea region to Russia following a
referendum set for Sunday.