The International Monetary Fund has warned Ukraine against the National Bank of Ukraine's financing the budget deficit via issuing more money or directing its profits in advance to cover the deficit.
IMF Managing Director Dominique Strauss-Kahn said this during a telephone conversation with Ukrainian President Viktor Yuschenko on Friday, the presidential press service reported.
The IMF managing director stressed that under the existing economic conditions Ukraine needs urgent reforms. These reforms have been listed in a letter of intent by the Ukrainian government and the central bank to the International Monetary Fund, Strauss-Kahn said.
The managing director expressed special concern over the bills, which have been passed recently by the Ukrainian parliament, which could cut the state budget’s receipts or boost its expenditures, which in turn would disbalance Ukraine’s public finance.
Yuschenko agreed with the interlocutor that Ukraine’s getting another tranche of the IMF loan will not help the country to promptly overcome the crisis without the urgent reforms. So the president promised to exert his power so that the necessary legislative amendments be introduced.
The Ukrainian president also thanked the Managing Director for cooperation between the IMF and Ukraine and assured of his country’s commitment to the agreements set out in the letter of intent – the document signed by Ukraine to facilitate the second review under the Stand-By Arrangement (SBA) with the International Monetary Fund.
As reported, the Ukrainian parliament voted on July 1 for the bills amending the state budget for 2009 and the law on the National Bank of Ukraine, which earmarked UAH 9.8 billion in extra revenues to the state budget to implement the state program for preparing for and hosting the finals of the Euro 2012 European Football Championship in Ukraine.
Besides, the Ukrainian Cabinet of Ministers has instructed the Finance Ministry to issue government domestic loan bonds worth UAH 18.6 billion to form a stabilization fund as part of Ukraine’s national budget, with the aim of raising NJSC Naftogaz Ukrainy’s statutory capital through the issue of stocks.
