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Nation    

Communists criticize government IMF plans
Journal Staff Report

KIEV, March 17 – Ukraine’s governing coalition showed its first signs of split on Wednesday after the Communist Party sharply criticized the government’s plans of resuming cooperation and borrowing from the International Monetary Fund.

Petro Symonenko, the leader of the Communist Party, a key member of the coalition, issued a statement criticizing Serhiy Tyhypko, a deputy prime minister for economy and an advocate of cooperation with the IMF, for the “wrong priority.”

“We are seeing that, through the IMF, the World Bank and the World Trade Organization, powerful Ukrainian industrial enterprises, agriculture are being destroyed,” Symonenko said. “Domestic producers are being squeezed out from domestic market in favor of foreign corporations and companies.”

The comments underscore concerns over long-term stability of the Ukrainian government, which had been created earlier this month to support the policy of President Viktor Yanukovych.

The split comes at a crucial time when the government needs legislative support to start economic reforms and austerity measures to narrow the country’s budget deficit estimated at 12% of the GDP.

Symonenko released the comments a day after the arrival of an IMF team in Ukraine for a fact gathering mission before senior IMF officials arrive at the end of March to decide on whether to resume the lending.

Iryna Akimova, the chief economic advisor to Yanukovych, said Wednesday the government will probably be unable to meet the IMF’s demand of reducing the budget deficit to 4% of the GDP in 2010. She said the government will target narrowing the budget deficit to 6-7% of the GDP.

Ukraine will need up to $4.5 billion to hold out until the IMF can resume the lending to the country, according to Oleksandr Savchenko, a former deputy finance minister.

Tyhypko, the No. 3 most popular politician in Ukraine following the presidential election last month, joined the government following a personal invitation by Yanukovych.

Tyhypko, whose Strong Ukraine party is not represented in Parliament, has been seeking to start reforms that would boost his party’s liberal image ahead of parliamentary election.

Tyhypko has been focusing on resuming cooperation with the IMF, which had suspended its $16.4 billion two-year loan to Ukraine in November 2009, after disbursing $10.6 billion in three installments since November 2008.

Approving a realistic 2010 budget, as well as hiking natural gas prices for households, were the key reforms suggested by Tyhypko.

But these reforms have received a cold shower welcome from the Communist Party.

“This is a shame when a person, who must be responsible for the strategy of the economic development of country, is before hand setting the wrong priorities,” Symonenko said.

“We will demand from the government a detailed report on losses that our country and our citizens incur after the joining to the WTO,” Symonenko said. “We also demand the report on the use of loans from the IMF, as well as proposals for revising the cooperation with these international organizations.” (tl/ez)




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