IMF hints at quick approval of Ukraine aid

IMF hints at quick approval of Ukraine aid

Kiev (AFP) - The International Monetary Fund said Thursday it made "significant progress" in talks with Ukraine's new Western-backed government over the resumption of a vital support programme for the crisis-hit state.

The announcement puts the new Kiev administration one step closer to seeing the release of billions of dollars in assistance promised by the United States and Europe as part of their effort to cement Ukraine's recent swing away from Russian influence.

Any fresh Western assistance hinges on the prior approval of an IMF programme that would oblige Kiev's untested leaders to follow a range of unpopular measures, such as ending budget-draining energy subsidies to households.

IMF mission chief Nikolai Georgiyev said he has seen a welcome commitment to restructure Ukraine's bureaucracy-laden economy from Prime Minister Arseniy Yatsenyuk.

"The mission has made significant progress in discussing with the Ukrainian authorities the policies to put the country on the path of economic reform, sound governance, and sustainable growth while protecting the poor and vulnerable," Georgiyev said in a statement.

"Our cooperation with the Ukrainian authorities has been excellent," Georgiyev added.

"The authorities' comprehensive reform program covers a wide range of issues and additional work needs to be completed to advance program discussions."

The IMF team arrived in Kiev on March 4 for what was supposed to be a 10-day mission aimed at examining the new government's books following the February 22 fall of the pro-Russian administration of president Viktor Yanukovych.

But the Fund decided to extend its stay in what many analysts interpreted as a sign it was moving ahead quickly with the approval of an assistance programme.

If approved, it would replace a $15-billion (10.9-billion-euro) package whose payments were frozen in 2011 over broken promises by Yanukovych's team.

Georgiyev said he now planned to conclude his work on March 25.

- Empty coffers -

Yatsenyuk has said that his government inherited virtually empty coffers from the ousted regime and required some 25 billion euros ($35 billion) in assistance over the coming two years to cover the country's foreign debts and budget shortfalls.

The European Union on March 5 offered to extend up to $15 billion (11 billion euros) to Ukraine while Washington has pledged $1 billion in loan guarantees.

But Washington's package has stalled in Congress amid the Republican Party's refusal to back a US quota increase to the Fund that appeared in the Senate's version of the Ukrainian aid package bill.

US President Barack Obama urged lawmakers on Thursday to extend assistance to the country of 46 million people "right away".

"Expressions of support are not enough. We need action," said Obama.

"I also hope that the IMF moves swiftly to provide a package of support for Ukrainians as they pursue reforms."

The IMF tore up its earlier Ukraine programme due to Yanukovych's refusal stop subsidising the payments households and factories make for natural gas imports from Russia.

Kiev was also criticised for failing to crack down on corruption and put an end to the uncomfortably close ties between the government and big business.

Ukraine ranked 112th out of 189 nations in the World Bank's 2014 Ease of Doing Business survey.

Its tax collection system was ranked 164th.

Ukraine's economy registered no growth last year and is expected by some analysts to contract by as much as 2.0 percent in 2014.

Moscow's VTB Capital bank predicted that the IMF might set a programme in place for Ukraine by April that would allow the European Union to immediately release around 1.6 billion euros ($2.2 billion) in aid.