Region: Azarov shuns IMF orders
Country may turn to world markets for much-needed loan
Posted: January 23, 2013
By Katya Gorchinskaya
From the Kyiv Post
Prime Minister Mykola Azarov says Ukraine will not concede to tough demands by the International Monetary Fund (IMF) to hike gas tariffs for all of the population and is looking to borrow at international markets to finance the outstanding payments.
Ukraine is to pay more than $9 billion in foreign debt this year, most of it to the IMF. But Azarov says the nation has no "desperate need" for IMF cash.
"We are not prepared, in the condition of low salaries and pensions, to significantly hike tariffs for gas for the population," Azarov said. He also said the government is prepared to compromise on other issues. "If the key things for the International Monetary Fund are the budget deficit, the monetary indicators and the deficit of Naftogaz, we will find common ground immediately," he said.
Ukraine's projected budget deficit is 3.2 percent of the gross domestic product, a growth forecast of 3.4 percent on the year in 2013. But analysts say both indicators are overly optimistic.
The IMF mission will work in Ukraine between Jan. 29 and Feb. 12. The government is hoping for a new standby loan program and is currently preparing its counter-proposals, Azarov said. He said the essence of these proposals is down to "a differential approach" in hiking the gas prices for the population, one of the IMF's key demands. He said the government is ready to consider hikes "for those who have European salaries" but not for low-income groups of the population.
"As far as hiking the price for the whole population goes, to the extent they [IMF officials] have indicated, we cannot agree to that," Azarov said. "If the situation was desperate, we would probably say 'OK, we will agree to your conditions.' " He also said this was the case in 2010, soon after his government was appointed following the election of Viktor Yanukovych as president.
Azarov said Ukraine is looking at other sources of financing outside the IMF, particularly at borrowing on foreign markets. "Currently, the financial market is extremely favorable for borrowing," Azarov said. "We will find the money and have no doubts about it."
He indicated Ukraine is likely to borrow in late January or February. He also said First Deputy Prime Minister Serhiy Arbuzov is currently in New York City "negotiating with investors."
"There is a deficit of resources for those who are overburdened with debts, who have no trust," Azarov said.
Katya Gorchinskaya can be reached at firstname.lastname@example.org