Ukraine’s president has accused the International Monetary Fund of being too lenient on the government led by Yulia Tymoshenko, his prime minister and bitter rival in next year’s presidential elections.
In comments that threaten to pull the IMF and Kiev’s other western lenders into the country’s messy politics, Viktor Yushchenko on Thursday questioned why the IMF had continued to provide Ms Tymoshenko’s government with financial assistance in spite of its failure to adopt key reforms.
The president has repeatedly accused Ms Tymoshenko’s government of pushing populist policies, citing its failure to raise natural gas prices for households to market levels and an unrealistic budget this and next year. “Neither the World Bank nor the IMF did the work that had been foreseen ... to shift the government towards reforms,” Mr Yushchenko said.
Ms Tymoshenko has accused Mr Yushchenko of trying to sabotage her presidential bid and her efforts to pull the country out of recession. The president’s comments were made as the IMF mulls granting Ukraine a fourth tranche this autumn from a $16.4bn (€11bn, £10bn) standby loan approved last autumn. Nearly $11bn from this aid package already received kept Kiev’s shaky bank sector and currency relatively stable. The Ukrainian hryvnia plunged 40 per cent last autumn when the global financial crisis broke, and remains under pressure.
The IMF is keen on staying out of Kiev’s poisonous politics, but a fourth tranche is seen as vital to keeping Ukraine afloat in the near term. Gross domestic product plunged 18 per cent in the first half of 2009.
The IMF has remained tight-lipped on Kiev’s political mayhem and has refused to confirm or deny widespread accusations by politicians and investigative news reports that suggest some of its aid to Ukraine has been misappropriated.
“In view of the upcoming elections, it is clear that on all major issues the ‘noise’ from politicians will increase,” said Peter Vanhecke, head of Renaissance Capital in Ukraine. “However, I expect the IMF position will remain consistent and that it will stick to its conditions while showing a rational dose of flexibility, especially now that the Ukrainian economy is showing signs of recovery.”
