KIEV, March 30 – The approval of three anti-crisis bills by Parliament on Tuesday may open way for the International Monetary Fund to send a team to Ukraine for talks over a $1.85 billion standby loan installment, a senior official said Monday.
Oleksandr Shlapak, the first deputy chief of staff at the office of President Viktor Yushchenko, said the resumption of the talks with the IMF is the key for the overcoming Ukraine’s severe economic crisis.
“The approval of the three bills is a condition for the IMF team to come back,” Shlapak said. “I’m convinced we will approve these bills and we will have an opportunity to invite the IMF [team.]”
The bills include slapping higher excise taxes on tobacco and cigarettes, alcoholic beverages and liquors and diesel fuel, as well as increasing revenue for the state-operated Pension Fund.
Prime Minister Yulia Tymoshenko does not control the majority in Parliament, which makes the approval of the bills a challenge for her government in the 450-seat legislature.
But the involvement of Yushchenko suggests that a small group of lawmakers that are loyal to Yushchenko - and not members of the coalition - may generate sufficient support for the bills, analysts said.
On Thursday Yushchenko spoke by phone with a deputy managing director at the IMF to make sure that the IMF will send the team to Ukraine upon the approval of the bills, Shlapak said.
On Monday Yushchenko – also by phone – spoke with leaders of opposition groups in Ukraine, the Regions Party and the Communist Party, asking them not to block the work of Parliament to let the coalition approve the bills, he said.
Winning support of the IMF is crucial for Ukraine to avoid default on its foreign debt obligations this year and next, analysts said.
Earlier this month, the government approved a number of decisions complying with demands from the IMF. The decisions strengthen the independence of the National Bank of Ukraine by removing earlier provisions that had required the NBU to lend money directly to the government to finance the budget deficit.
The IMF last month suspended $1.85 billion installment to Ukraine within its $12.4 billion rescue package approved last year after the government had refused to comply with the fund’s major demands.
The IMF was especially concerned that falling budget revenue had been widening budget deficit dramatically, while the government’s plans to rely on borrowing from the NBU would only make the situation worse.
Ukraine counts on the IMF lending for avoiding default on foreign debt obligations this year and next as credit crunch has been making it difficult to borrow from markets worldwide.
The hryvnia lost about 50% of its value against the U.S. dollar since September as falling exports of steel, Ukraine’s main export commodity, reduced supply of hard currency to the domestic market. (tl/ez)