Delegation led by Yekhanurov heads to Washington in desperate quest for more IMF money
ials are hard at work polishing their rhetorical apples in preparation for meetings with international creditors in Washington, which have been rescheduled from July 22 to July 31 at the request of U.S. officials organizing the visit.
The Ukrainian delegation led by First Deputy Prime Minister Yury Yekhanurov is hoping to convince the International Monetary Fund that Ukraine is once again ready to begin drawing money under the fund’s $2.6 billion loan program, which it froze 10 months ago over Ukraine’s failure to meet economic reform targets.
But the Ukrainian contingent, which also includes Finance Minister Ihor Mitiukov and National Bank of Ukraine Chairman Volodymyr Stelmakh, is likely to confront growing opposition from several influential U.S. congressmen in their bid to open the IMF’s money tap.
U.S. lawmakers, who have authorized 26 percent of the fund’s usable resources, criticized Ukraine during their July 13 debate on the foreign operations, export financing and related programs bill for fiscal year ending 2001.
Representative Marcy Kaptur – co?chair of the U.S.?Ukrainian congressional caucus – cited billions of dollars of ineffective international and bilateral assistance to Ukraine, which she said “have been directed to what one can politely call the establishment – not to the people desperately trying to eke out a living.”
Nebraska Representative Doug Bereuter added:”IMF resources have been misused. We need to have reform. We need to be more insistent to make sure that the funds we do provide are properly spent and accounted for.”
Their comments echo growing sentiment among U.S. lawmakers that the IMF should implement strong anti?corruption procedures and safeguards.
“Only after its lax policies were challenged by the [U.S.] Congress and the press, amidst significant and embarrassing irregularities by borrowers, has the IMF come to see that some reform of its own procedures are in order,” said Jim Saxton, co?chair of the U.S. House of Representatives’ Joint Economic Committee. That committee continues to goad IMF auditors into investigating allegations that a $5 billion tranche to Russia in August 1998 ended up in Swiss Bank accounts controlled by members of former Russian President Boris Yeltsin’s entourage.
While the West has expressed dissatisfaction with how Ukraine handled its aid money and IMF credits, support for continuing high levels of assistance also remains strong.
Influential American, German and Dutch leaders have assured Kuchma in person over the last several months that they would support a decision by IMF directors to resume lending.
Yekhanurov, for his part, says Ukraine “deserves” continued international support for the government’s implementation of bold economic and structural reforms.
“The main thing for us is the recognition that Ukraine is making reforms on its own, on schedule, and should not be pushed,” Yekhanurov said on July 21.
Last September, the IMF suspended its $2.6 billion EFF program, launched in 1998, over Ukraine’s failure to meet numerous conditions. The resumption of IMF lending was further delayed by a three?stage audit of Ukraine’s NBU reserves, which followed allegations in Western press that Ukraine improperly used IMF loans and misreported the level of its hard?currency reserves.
The PricewaterhouseCoopers audit, two stages of which have been completed thus far, found no misuse of loans, but confirmed that the NBU overstated the level of its currency reserves in 1997.
Lytvytsky said he understood that the amount of IMF lending to Ukraine could be cut back if Ukraine is told to pay back some of the credits the country received after it misrepresented its currency reserves.
Ukrainian officials are particularly eager for the IMF to resume lending because other creditors, including the World Bank, would likely follow suit.
Last month’s IMF mission to Kyiv offered the Ukrainian government a draft project of 11 structural measures that Ukraine must implement before the IMF Board of Directors meeting in August in order to qualify for loans under the EFF program.
Those conditions included balancing the budget for this year, speeding up privatization, reforming the energy sector, lifting foreign trade restrictions, settling account balances between the Ministry of Finance and the NBU, and increasing communal service tariffs throughout all regions in Ukraine.
Although government officials claim to have implemented most of those conditions, some remain unresolved, including one requiring Ukraine to cancel a 23 percent excise tax on the export of sunflower seeds.
