KIEV, Sept. 21 - An ongoing political crisis may jeopardize Ukraine's finances this year as the government keeps postponing the planned sale of ?600 million 10-year Eurobond, Acting Finance Minister Viktor Pynzenyk said Wednesday.
The government planned to hold presentations of the Eurobond among potential investors early September, but had been forced to postpone the issue after President Viktor Yushchenko had sacked the government Sept. 8.
The issue ran into further difficulties on Sept. 20 after Parliament had rejected Yuriy Yekhanurov, Yushchenko's choice for the new prime minister.
The developments send a message of uncertainly to foreign investors and that forces the government to further delay the Eurobond at a time when the government badly needs cash, Pynzenyk said.
"We have to get out of this situation as quickly as possible," Pynzenyk said.
Yushchenko has been Wednesday holding consultations with different political groups, including opposition, to secure support for the new prime minister and the new government.
The government of ousted Prime Minister Yulia Tymoshenko has been increasingly looking at international borrowing to meet bloated social payments ahead of the March 2006 general election, while economic growth has been slowing down.
Jointly with the rapid economic slowdown, which automatically reduced budget revenue, Ukraine appears to be lagging far behind in raising revenue from selling state assets this year.
The government planned to raise 6.9 billion hryvnias, or $1.38 billion, from selling state assets in 2006, but had so far managed to raise 730 million, or $146 million, according to the Finance Ministry.
The problem may be fixed if the government sells 93% stake in Kryvorizhstal, the largest steelmaker, on Oct. 24, which is expected to net between $2 billion and $3 billion, according to analysts.
But Pynzenyk said the government still needs the Eurobonds in case something goes wrong. "It's to be on the safe side," he said.
Citigroup, Deutsche Bank and UBS were named earlier this year to help the government sell the Eurobonds, which would be Ukraine's first tapping of international markets this year. (nr/ez)