Ukraine to get up to $27bn from international bailout
UKRAINE is set to receive financial aid of between $14bn (£8.4bn) and $18bn from the International Monetary Fund (IMF), as the world body laid out the vast economic challenges facing the country.
The amount announced yesterday is lower than the $15bn-$20bn the interim government of Ukraine had asked for, but higher than the flat $15bn that was expected by many earlier this week.
Although the IMF will only provide up to $18bn of assistance itself, it expects that more will come from the wider international community, bringing the total to $27bn.
The US government is still working towards the approval of a $1bn loan guarantee for Ukraine’s government, and the White House yesterday welcomed the start of “historic reforms to address long-standing problems that have undermined Ukraine’s economic strength and prosperity”.
Most of the IMF’s concerns surround the state-owned energy firm Naftogaz. Nikolay Gueorguiev, head of the IMF’s Ukraine mission says that the company’s deficit has been “driven by the sharp increase in sales at below-cost prices” to the equivalent of two per cent of GDP. He added” Without policy action, the combined budget/Naftogaz deficit would widen to over 10 per cent of GDP by 2014.”
A corruption investigation has cast uncertainty over the organisation’s hierarchy, and led to the arrest of the previous chief executive last week. The firm’s replacement boss Andriy Kobolev, who worked at Naftogaz under an earlier administration, was announced on Wednesday.
The IMF adds that the country’s international currency reserves have run to what Gueorguiev calls a “critically low level” worth only two months of imports, and that the country’s monetary policy should target inflation.