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Ukraine to rely on IMF loans through 2012
Journal Staff Report

KIEV, April 15 – Ukraine will continue to rely on borrowing from the International Monetary Fund at least through the end of 2012, a top economic aide to President Viktor Yanukovych said Thursday.

The timeframe suggests the government does not expect that the economy to fully recover for at least three years after recording a 15% contraction in 2009.

“The question under which program the cooperation with the IMF is to continue is still under discussion,” Iryna Akimov, Yanukovych’s top economic aide, said. “But [the cooperation] will not finish this year. It will continue for at least two more years.”

The IMF approved a $16.4 billion two-year Standby loan in November 2008 and Ukraine has so far received $10.6 billion from the loan, before it was suspended in November 2009.

IMF Managing Director Dominique Strauss-Kahn, at a meeting with Yanukovych in Washington on Monday, said the lending may be resumed after the government approved 2010 budget with sound budget deficit.

Strauss-Kahn urged Yanukovych to “strengthen fiscal sustainability and support the recovery."

Akimova, who also joined the meeting in Washington, said the parties have not yet discussed the size of the lending that Ukraine will need in 2011 and 2012.

“We did not talk about the number,” Akimova said.

Meanwhile, in addition to borrowing, the government also plans to accelerate selling state assets to raise cash that will be spent on infrastructure development projects.

The government will try to raise between 15 billion hryvnias and 20 billion hryvnias from selling state assets in 2010, Serhiy Tyhypko, a deputy prime minister, said Thursday.

The figure greatly exceeds the forecast of 10 billion hryvnias that has been anticipated in the 2010 budget, suggesting the government seeks more revenue.

“The revenue that we may raise through the end of the year is 15-20 billion hryvnias,” Tyhypko said, adding that Yanukovych will soon sign a decree that lifts earlier restrictions on privatization.

The money will be spent on infrastructure projects, such as building hotels, airports and highways, stimulating domestic demand in order to accelerate economic growth.

Ukraine has been lagging behind in erecting infrastructure complexes ahead of the Euro-2012 soccer championship that the country will jointly host with Poland.

The government is financing construction of a $300 million soccer stadium in Kiev, a smaller stadium in Lviv, an airport in Lviv and in Donetsk, and plans to finance construction of hotels throughout the country.

“Once we begin to build, we will begin to live well,” Andriy Kliuyev, the first deputy prime minister, said Thursday. “Also, taxes must be lowered. This will stimulate domestic market.”

The government expects the economy will grow 3.4% on the year in 2010, reversing a 15% contraction in 2009 caused by collapsing external demand for steel, Ukraine’s main export commodity. (tl/ez)




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