27 March 2014, 22:16

Ukraine's parliament passes anti-crisis law required for IMF bailout

Ukraine's parliament passes anti-crisis law required for IMF bailout

Ukraine's parliament on Thursday voted in favour of an anti-crisis law accepting austerity measures demanded by the International Monetary Fund as part of a $14-18 billion bailout package.

Earlier, parliament deputies failed to support the draft law despite the entreaties of the government, but later returned after a recess and approved it with a vote of 246 - 20 more than the number required.

IMF to extend Ukraine $14-18 bln, as the country's economy is on brink of bankruptcy

The International Monetary Fund (IMF) has reached a working-level agreement with the Ukrainian leadership on opening a two-year credit worth from $14 billion to $18 billion, the IMF said in a press release.

The International Monetary Fund has agreed to grant Ukraine between $14 billion and $18 billion to help the country avoid a default. The package is vital for securing further help from other international lenders like the World Bank and the EU.

The IMF promised to grant Kiev the lifeline over the next two years, after finishing its mission in Ukraine on Wednesday. Overall support from the broader international community will stand at $27 billion over the period, the IMF statement said.

The agreement in principle, worth the equivalent of 10.8-13.1 billion euros, is tied to tough reform conditions which will have a big impact on the Ukrainian economy and people. The Fund's Ukrainian mission chief Nikolai Georgiyev said the rescue would form the central part of a broader package released by other governments and agencies amounting to $27 billion (19.6 billion euros) over the next two years.

Georgiyev said the actual size of the "standby agreement" would be determined only once the new Western-backed leaders of Ukraine implemented the reforms the Fund had sought from the Ukrainian President Viktor Yanukovych.

"The programme will be approved by the IMF board when the steps that I mentioned are implemented," Georgiyev told reporters after holding a decisive round of talks with Ukrainian President Arseniy Yatsenyuk on Wednesday. "We expect (the approval) by the end of April."

The package announced by the Fund is only slightly smaller than that $15-20 billion (10.9-14.5 billion euros) requested by new leaders when Georgiyev's mission first arrived in Kiev on March 4.

The Fund has made an immediate end to Ukraine's costly gas subsidies one of its main conditions for the programme's approval. It also wants the central bank to stop propping up the Ukrainian currency and for the government to cut down on corruption and red tape.

Georgiyev called these two steps as a more committed effort to fight bureaucratic red tape and state corruption "the foundation for stable and sustainable growth".

The IMF programme was announced one day after the Ukraine's state energy company Naftogaz said it would increase domestic heating gas prices by 50 percent on May 1.

Naftogaz added that rates for district heating companies would go up by 40 percent on July 1 and that further rate increases were likely in the coming years.

Ukraine's central bank has already limited its currency interventions - a decision that has seen the hryvnia lose more than a quarter of its value against the dollar since the start of the year.

The IMF programme's formal approval in April will set in motion the release of further assistance from both Washington and the European Union.

Yatsenyuk said he expected European Union officials to send 1.6 billion euros ($2.2 billion) to Kiev within two months of approval of the loan deal.

The United States has also pledged $1 billion (720 million euros) in loan guarantees while Japan has promised up to $1.5 billion (1.1 billion euros).

Economist believe that the IMF decided to move faster than it may have initially wanted out of concern that the Ukrainian government could become insolvent within a matter of months.

Ukraine's fast-depleting reserves - spent the previous years on propping up the currency at artificially high rates in order to avoid public discontent - had reached levels sufficient to cover just two months of imports. It also owes billion of dollars in foreign debt payment coming due within the next few months.

Ukraine on brink of economic bankruptcy - Acting PM Yatsenyuk

Ukraine is standing on the verge of the economic and financial bankruptcy, Arseniy Yatsenyuk, the acting prime minister of Ukraine, said at a parliamentary session on Thursday.

Ukraine is on the verge of economic and financial bankruptcy, said Acting Ukrainian Prime Minister Arseniy Yatsenyuk while addressing a Supreme Rada meeting earlier today.

According to him, the rate of inflation will make up 12% to 14% in Ukraine in 2014, while gross fiscal deficit stands at 289 billion hryvnias, or some 28 billion dollars.

"Ukraine's GDP growth will slow down to 3% in 2014", he said, "if we adopt the government-proposed package of stabilization measures. Otherwise, Ukraine may default to minus 10% of the GDP", Yatsenyuk said.

Voice of Russia, TASS, Interfax, AFP

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