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| Ukraine, IMF agree 16.5-billion-dollar loan |
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Time is GMT + 8 hours
Posted: 27-Oct-2008 06:01 hrs |
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| A man uses a pocket calculator in front of an exchange counter in the centre of Kiev on October 24. Ukraine, facing political deadlock and an economic crisis, secured a 16.5-billion-dollar loan from the International Monetary Fund on Sunday aimed at propping up its fragile banking system. |
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Ukraine, facing political deadlock and an economic crisis, agreed a 16.5-billion-dollar loan from the International Monetary Fund on Sunday.. The deal, announced by IMF director Dominique Strauss-Kahn, followed a 2.1-billion-dollar loan to Iceland on Friday and comes amid appeals for help from other countries.. "An IMF staff mission and the Ukraine authorities have today reached agreement ... on an economic program supported by an SDR 11 billion (16.5 billion dollars) loan," Strauss-Kahn said in a statement.. The IMF, which some analysts had warned risked becoming obsolete before the financial crisis blew up, has announced it will make available more than 200 billion dollars in loans to countries facing financial difficulties.. Belarus and Pakistan have also appealed for assistance.. The deal with Ukraine must now be approved by the board of the Washington-based institution.. "The IMF is moving expeditiously to help Ukraine, and this program is focused on the essential upfront measures needed to maintain confidence and economic and financial stability," the IMF chief said in his statement.. Ukraine stopped early withdrawals from savings accounts this month in a bid to halt a run on banks. The central bank has bailed out several banks and the Ukrainian stock market has lost more than 70 percent of its value this year.. The vast former Soviet country is getting less money from its main export, steel, because of a slump in global demand and is using up foreign currency reserves to support its currency, the hryvnia, analysts say.. These factors could lead to problems for the government to pay back some of the foreign loans that have helped boost Ukraine's economy in recent years as well as to make up for budget deficits.. Ukraine's Finance Minstry welcomed the IMF's support, saying it "opened a door to Ukraine's speedy cooperation with other international financial organizations" and bolstered private investors' confidence in the country's banking sector.. On Friday, ratings agency Standard and Poors had downgraded the credit standing of Ukraine on doubts about its ability to deal with the mounting financial crisis.. "The authorities' program is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," Strauss-Kahn said.. The future of the IMF chief had been uncertain following an affair with a colleague that sparked an internal investigation into harassment and favoritism.. He was cleared on Sunday after the IMF executive board said a probe had "concluded that there was no harassment, favoritism, or any other abuse of authority by the managing director.. "Nevertheless, the executive board noted that the incident was regrettable and reflected a serious error of judgment," it said in a statement.. In a teleconference with the press, IMF executive director Shakour Shaalan said that the board had unanimously accepted Strauss-Kahn's apologies and that it would continue to work with him.. The loan to Ukraine comes as President Viktor Yushchenko and Prime Minister Yulia Tymoshenko are locked in a fierce battle over the president's decision to call fresh elections.. Analysts have said their feud risks exacerbating the country's deep economic problems.. The IMF loan was "under an 24-month stand-by arrangement" and "consideration by the board would follow approval of legislative changes to Ukraine's bank resolution program," the IMF statement said.. Amid turmoil on the financial markets, the International Monetary Fund is being promoted by some as a global institution that should be strengthened to police financial markets.. German Chancellor Angela Merkel became the latest on Friday when she called for "better international coordination" and "a strengthening of the role played by the IMF in ensuring stability of the global financial system.". The IMF is one of the cornerstones of the Bretton Woods system that has governed global finance since World War II. It serves as a lender of last resort to countries and monitors capital flows. — AFP
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