Sunday, February 1, 2015
YOLO COUNTY NEWS
99 CENTS

IMF offers Ukraine up to $18 billion in loans

By
From page A2 | March 27, 2014 |

KIEV, Ukraine (AP) — The International Monetary Fund pledged up to $18 billion in loans Thursday to prop up Ukraine’s teetering economy, and the prime minister warned that everyone is going to feel some pain from the necessary financial reforms ahead.

Former Ukrainian prime minister Yulia Tymoshenko announced that she will run for president in the vote set for May 25. Tymoshenko, who was released from jail last month following the overthrow of President Viktor Yanukovych, returns as one of the most polarizing figures in Ukraine’s political scene.

In Washington, the U.S. Congress was working on a bill Thursday to slap harsher sanctions against Russia for its annexation of Ukraine’s Crimean Peninsula and provide $1 billion in loans to Ukraine. Russia, for its part, announced it would set up its own payment system to rival Visa and MasterCard after the two companies pulled their services from some Russian banks in the wake of international sanctions.

In a lengthy, passionate address to parliament in Kiev, Prime Minister Arseniy Yatsenyuk warned that Ukraine was “on the brink of economic and financial bankruptcy” and laid out the fixes needed to put the country back on track.

“The time has come to tell the truth, to do difficult and unpopular things,” Yatsenyuk said. “The country is short 289 billion hryvnia ($25.8 billion), which is practically equivalent to the entire state budget for this year.”

The IMF loan, which is expected to range between $14 billion and $18 billion, hinges on structural reforms that Ukraine has pledged to undertake.

Ukraine’s new government finds itself caught between the demands of international creditors and a restive population that has endured decades of economic stagnation, corruption and mismanagement. The reforms demanded by the IMF — which included raising taxes, freezing the minimum wage and hiking energy prices — will hit households hard and are likely to strain the interim government’s tenuous hold on power.

Ukraine, a nation of 46 million people, is battling to install a semblance of normalcy since Yanukovych was ousted in February after months of protests ignited by his decision to back away from closer relations with the EU and turn toward Russia. Over the last few weeks, an interim government has formed, Ukraine lost Crimea to Russia and further possible military incursions by Russia are feared. The country is also bracing for a turbulent political season ahead of the presidential vote.

“This is a kamikaze government that perfectly well understands that there is no other way to stabilize Ukraine,” said Viktor Zamyatin, analyst with the Kiev-based Razumkov Center think tank. “The catastrophic state of Ukraine’s economy has forced the government’s hand.”

But he said it could pay a steep price.

“It is hard to explain to the voter that the worsening of the economy has happened not because of the revolution, but because of Viktor Yanukovych’s policies,” he said.

This will be Tymoshenko’s second attempt to win the presidency. She narrowly lost to Yanukovych in 2010 and spent two years in jail on charges that many in the West considered politically tainted.

She is variously admired as an icon of democracy or detested as a self-promoting manipulator with a shady past. On Thursday, alluding to her time in jail, she declared she has earned the right to promise that she will combat corruption.

“I will be the candidate of Ukrainian unity,” Tymoshenko said Thursday. “The west and center of Ukraine has always voted for me, but I was born in the east.”

Ukraine is politically divided, with western regions favoring closer ties to Europe and the east looking toward Russia. But the dire state of its economy is an unavoidable issue: Ukraine’s Finance Ministry has said it needs $35 billion over the next two years to avoid default.

The IMF said recent economic policies have drastically slowed Ukraine’s growth and brought foreign currency reserves to a “critically low level.”

“Ukraine’s macroeconomic imbalances became unsustainable over the past year,” the IMF said in a statement Thursday.

Reforms sought by the IMF include making the energy sector more profitable, maintaining a flexible exchange rate, slashing the deficit and combating widespread corruption.

One immediate reform will be to let gas prices for households float upward to become more in line with market prices. Ukraine for years has relied on discounted gas from Russia and then subsidized that further, so that residents are used to extremely low energy prices. Russia has abandoned the discounts and Ukraine’s government cannot afford the extra subsidy anymore.

State energy company Naftogaz announced this week that household gas prices would rise 50 percent beginning May 1 to make utility costs economically viable for the state by 2018. Yatsenyuk said the number of households getting state energy subsidies would rise from 1.4 million to four million.

He also announced layoffs for 10 percent of Ukraine’s civil servants, or 24,000 workers.

Other donors, including the European Union and Japan, have already pledged further aid to Ukraine, conditional on the conclusion of an IMF bailout and reform package. The total amount of international assistance will be about $27 billion over the next two years.

Separately, the 28-nation EU has prepared a wider aid package including loans and grants for Ukraine expected to total more than $10 billion over the coming years.

Ukraine has historically had a fraught relationship with the IMF and failed to keep to the terms of earlier bailouts in 2008 and 2010. Such recalcitrance is seen as less probable this time around, although doubts persist.

“Given the volatile political situation, the prospect of a change in president following elections on May 25, and Ukraine’s track record with the IMF, there will still be many doubts about whether politicians will be able or willing to push through more substantial changes,” William Jackson, an analyst at Capital Economics research company, wrote Thursday.

The White House welcomed the IMF loan announcement, calling it a “powerful sign of support from the international community for the Ukrainian government.”

————

By Peter Leonard. Nataliya Vasilyeva in Moscow and Juergen Baetz in Brussels contributed to this report.

Comments

comments

The Associated Press

.

News

Well-loved library has services for all ages

By Jeff Hudson | From Page: A1 | Gallery

 
The end of an era for The Enterprise, as pressroom closes

By Kimberly Yarris | From Page: A1 | Gallery

 
Jewish fraternity vandalism classified a hate crime

By Lauren Keene | From Page: A1

Man arrested after body parts found in suitcase

By The Associated Press | From Page: A2

 
Islamists post beheading video

By The Associated Press | From Page: A2

More than a foot of snow possible for Midwest, Northeast

By The Associated Press | From Page: A2

 
 
UCD Med Center patient tested negative for Ebola

By Enterprise staff | From Page: A3

Kudos to the Thomsons

By Sue Cockrell | From Page: A3

 
Arboretum ‘I do’

By Special to The Enterprise | From Page: A4

 
The story of Mark and Maria

By Special to The Enterprise | From Page: A5

Summer lovin’

By Special to The Enterprise | From Page: A5

 
Stories come alive at the library

By Enterprise staff | From Page: A8

Stepping Stones supports grieving youths

By Enterprise staff | From Page: A9Comments are off for this post

 
Vote for your favorites in Readers’ Choice poll

By Enterprise staff | From Page: A9

Japanese students seek Davis host families

By Enterprise staff | From Page: A9

 
And bingo was the game-o

By Tate Perez | From Page: A9

Lee will speak Wednesday about city issues

By Enterprise staff | From Page: A9

 
Training starts Tuesday for Jepson Prairie Preserve tour guides

By Enterprise staff | From Page: A9 | Gallery

Lecture looks at women in Egypt

By Special to The Enterprise | From Page: A9

 
Questions and answers about breast cancer set

By Enterprise staff | From Page: A11

Davis Arts Center welcomes students’ work

By Enterprise staff | From Page: A11

 
Tuleyome Tales: Searching for the elusive McNab cypress

By Special to The Enterprise | From Page: A11 | Gallery

.

Forum

Three old ideas going, going, gone

By Marion Franck | From Page: A10

 
How much drinking is too much?

By Special to The Enterprise | From Page: A10

 
They’re experienced and honest

By Letters to the Editor | From Page: A12

Toy drive was a big success

By Letters to the Editor | From Page: A12

 
One-way street solves dilemma

By Letters to the Editor | From Page: A12

Council, follow your own policies

By Letters to the Editor | From Page: A12

 
Ensure that you’re protected against measles

By Special to The Enterprise | From Page: A12

Act would let patients control their own fates

By Our View | From Page: A12

 
Tom Meyer cartoon

By Debbie Davis | From Page: A12

Wi-Fi in our schools could result in health impacts

By Special to The Enterprise | From Page: A13

 
Life goes on in Rutilio Grande, despite country’s gang violence

By Special to The Enterprise | From Page: A13 | Gallery

.

Sports

 
Depth charge: DHS girls defeat Elk Grove

By Spencer Ault | From Page: B1 | Gallery

Blue Devil boys lose on Herd’s buzzer-beating trey

By Enterprise staff | From Page: B1

 
UCD women survive against winless UCSB

By Enterprise staff | From Page: B1

Foursome will represent Davis at national soccer tournament

By Evan Ream | From Page: B1 | Gallery

 
UCD roundup: Aggies make a racket but fall to Sac State, Pacific

By Enterprise staff | From Page: B2 | Gallery

Kings get past Pacers

By The Associated Press | From Page: B2

 
Sharks blank Blackhawks

By The Associated Press | From Page: B2

.

Features

.

Arts

.

Business

Doby Fleeman: Toward a more perfect Davis

By Doby Fleeman | From Page: A12

 
Ullrich Delevati, CPAs, adds senior accountant

By Special to The Enterprise | From Page: A12

And the survey says: Success for Davis Chamber

By Debbie Davis | From Page: A12

 
Putah Creek Winery launches ‘Give Back Tuesday’

By Special to The Enterprise | From Page: A12

Seminar will cover business challenges

By Enterprise staff | From Page: A13

 
Japanese fondue dips into Davis scene

By Wendy Weitzel | From Page: A13 | Gallery

Novozymes, Cargill continue bio-acrylic acid partnership as BASF exits

By Special to The Enterprise | From Page: A13

 
.

Obituaries

.

Comics

Comics: Sunday, February 1, 2015

By Creator | From Page: B8