Ukraine is set to rely on Chinese funds after Kyiv surprisingly announced it was turning away from the International Monetary Fund (IMF) to help finance its struggling economy....
The Central Bank of China has offered a credit line to Ukraine, the Ukrainian daily Kommersant reported today (21 November).
The announcement comes after the IMF published on 18 November a report on the implementation of the stand-by agreement with Ukraine, deploring a lack of political will from Kyiv (see background).
The IMF said that the stand-by programme initiated for Ukraine in 2008 had brought short-term positive results, but not the broader improvement of the economic situation it had expected.
“Progress [in structural reforms] hasn’t been as fast as we would like it to be,” Max Alier, the IMF’s resident representative in Ukraine said recently, quoted by the Kyiv Post.
Ukraine next year will face considerable challenges related to the worsening global economic situation, which will make GDP growth slow to 3.5% from this year’s 5%, Alier said.
He also said the country needs to maintain its attractiveness to investors as it requires large external injections of capital.
One reason for Ukraine to suspend IMF talks also appears to be related to Kyiv’s ongoing negotiation with Russia over natural gas prices. Sergiy Tigipko, Ukrainian Vice Prime Minister and Minister of Social Policy, said on Monday that the Ukrainian government expects gas talks with Russia to be completed in this month.
Tigipko said the negotiations with the IMF mission, which are now suspended, will depend on the outcome of the talks.
Ukraine is buying gas from Russia at $400 (€297) per thousand cubic meters, which is substantially higher than the price Western Europeans pay for Russian gas. A new price at the level of $200 (€148) per thousand cubic meters is reportedly under negotiation.
On 14 November Ukrainian Prime Minister Mykola Azarov surprisingly said that the country could survive without the help of IMF.
Addressing a press conference in Kyiv, Azerov said that after almost a full year, Ukraine had not received “a single dollar” from the IMF.
“We survived this year, we will survive the next one,” Azerov said, adding that thanks to a balanced economic policy, the government had been able to stabilize the internal situation and to reduce the ratio of the external debt to GDP.
According to the Russian website Lenta.ru, even if China grants Ukraine the funds which were expected from the IMF, the presence of the latter in Ukraine is still needed, as it provides a climate of confidence needed by foreign investors.
China has already provided credits to Belarus, another former Soviet country....
[It cannot be a coincidence that the Uzbek railway line which suffered a terrorist bombing on Nov. 16 services the Tajik city where the Russian pilot was sentenced to eight and a half years. This implicates either the Russian secret service in the bombing of the NDN (Northern Distribution Network), or links Uzbek terrorists to Russian interests. Either way, the terror attack was a message to Obama to end the Tajik pilot gambit. It should be remembered that the IMU (Islamic Movement of Uzbekistan) was created by a Russian Special Forces soldier, allegedly gone rogue Juma Namangani.]
The result of Russia’s pressure was that on Tuesday Tajik prosecutors returned to the court in the southern town of Kurgan-Tyube [SEE: Uzbekistan has suspended the movement of trains on the line of Termez – Kurgan-Tube]
and asked the judges to reduce the pilots’ original terms to two-and-a-half years.
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Why is the Pentagon spending tens of millions of U.S. tax dollars to whitewash the image of Central Asian dictatorships, just like they do daily in MENA for Decades....?