Top Ukrainian officials flew to Washington in the first days of February to plead with the International Monetary Fund to resume lending to Ukraine, which appears to be the government's only hope of avoiding a default on its foreign debt.
National Bank Governor Viktor Yushchenko left on Feb. 1, followed by Prime Minister Valery Pustovoitenko and Economy Minister Vasyl Rohovy on Feb. 2. The delegation will met with IMF, World Bank and U.S. government officials, including IMF Managing Director Michel Camdessus, World Bank President James Wolfenson and U.S. Secretary of State Madeleine Albright.
Besides kibitzing on the IMF's negotiations, Albright warned Pustovoitenko that U.S. aid to Ukraine could be cut by more than half this year due to lack of progress on disputes with American investors.
The Ukrainian delegation hoped to convince the IMF to lift its suspension of a three-year, $2.2 billion loan agreement signed last September. An IMF delegation left Kyiv on Jan. 26 saying it needed to consult with IMF management before deciding what recommendation it would make to the IMF's board of directors, which is expected to bring up the issue later this month.
President Leonid Kuchma's also met with top U.S., IMF and World Bank officials at the World Economic Forum in Davos, Switzerland, including U.S. Vice President Al Gore and IMF's second-in-command, deputy managing director Stanley Fisher.
On returning from Davos on Jan. 30, Kuchma said he was confident that cooperation with the IMF would continue.
'I am sure it will be precisely so,' he said at a news conference at Boryspil airport. 'Why stop halfway?'
At a presidential administration press briefing on Feb. 3, spokesman Oleksandr Martynenko said there was no news yet from Washington. Pustovoitenko was due to return that night and Yushchenko the following weekend.
Ukraine is due to pay a total of $2 billion on its foreign debts this year, including Eurobonds and payments on IMF loans. The National Bank's hard-currency reserves are currently at half that level.
Before flying to Washington, Yushchenko again put off deciding on a new exchange-rate corridor for the hryvna. Since its official trading band of Hr 2.5-3.5 to the dollar expired at the end of 1998, the National Bank has kept the official exchange rate at Hr 3.427 to the dollar while repeatedly postponing a decision on a new corridor.
Currency traders expect the hryvna's value to drop as soon as the National Bank allows it to. But the scale of the drop will depend on the IMF's decision. The government has said that without IMF money, it will have to dramatically devalue the hryvna to raise hard currency.
Yushchenko was expected to announce a new currency trading band soon after his return from Washington.
At the Jan. 30 news conference, Kuchma acknowledged Ukraine had not met many of the commitments it made in the IMF agreement, but said most of the blame lay with parliament. He pointed to the parliament's failure to eliminate state subsidies of household utilities and pass laws defining the status and organization of the National Bank and Cabinet of Ministers.
'We cannot step over the parliament and go forward. Work must be continued to pass those laws,' the Interfax news agency quoted Kuchma as saying.
However, IMF officials have pointed to delayed reforms that the government could make without parliament's approval. The government promised, for example, to lay off 400,000 state employees by the end of 1998.
Parliament Speaker Oleksandr Tkachenko said at a Feb. 2 news conference that those laws would be debated by parliament this month. He added, however, that parliament must ratify the agreement with the IMF and that he was not happy with it.
'We have to work with international organizations on terms of equal partnership, but when I read the [IMF-government agreement], it's not equal partnership,' he said.
Tkachenko said the agreement would be discussed at a meeting between ministers and parliament leaders after the mission's return.
Ukraine received $335 million of the loan before it was suspended in early November. A similar loan was suspended in early 1998 after similar stalling on reforms and eventually replaced with a smaller, shorter-term standby loan, which was suspended as well.
