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Ukrainian Parliament Discusses $16.5-Billion IMF Loan

Ukraine has already bailed out several banks

Ukraine has already bailed out several banks

Ukrainian deputies are scheduled to discuss a multi-billion-dollar loan from the International Monetary Fund (IMF) on October 28.

The economic rescue package, unveiled on October 26, is conditional on Ukraine's fractious parliament adopting important financial reforms.

The IMF has offered to loan Ukraine $16.5 billion to help the country weather the global economic crisis.

The crisis has severely weakened Ukraine's exports, stock market, banks, and currency.

IMF Managing Director Dominique Strauss-Kahn says the rescue package, which would stretch over the next two years, should help protect Ukrainian firms and families from further economic deterioration.

But the bail-out comes with conditions. Under the deal, Ukraine's fractious parliament must adopt a raft of likely unpopular anti-crisis measures.

The IMF hasn't made the conditions public, but experts expect them to include cutting government wages, pensions, and subsidies for household utilities, as well as increasing taxes on gasoline, alcohol, and tobacco.

Ukrainian President Viktor Yushchenko on October 27 called on deputies to put their differences aside and approve the package at today's parliamentary session.

"It would be a bad example for parliament to block the plan," he said.

Power Struggle In Parliament

Deputies loyal to Prime Minister Yulia Tymoshenko, who is again locked in a bitter power struggle with former ally Yushchenko, nonetheless blocked the vote, forcing an adjournment.

They were demanding that the IMF loan be discussed prior to a draft law to finance early parliamentary elections called by Yushchenko in December and opposed by Tymoshenko. It was unclear when deputies would reconvene to examine legislation needed to secure the loan.

Ukraine's political in-fighting means the legislation faces a rough ride in parliament -- each main parliamentary faction has put forward its own anti-crisis draft law.

The IMF package is instrumental in helping Ukraine stay afloat amid global financial turmoil.

The country's economy has enjoyed an economic boom in recent years thanks to a rise in prices for its main export, steel. But a recent slump in international demand for steel has forced the country to tap into its foreign currency reserves to support its currency, the hryvnya.

The central bank has bailed out several banks and the Ukrainian stock market has lost more than 70 percent of its value this year.

The IMF loan to Ukraine is the latest sign that the international body -- much criticized for failing to sounding the alarm ahead of the global crisis -- is now assuming a key role as a rescue service for economies hardest hit by the crisis.

The fund has announced a $2.1-billion package for Iceland, a bail-out deal for Hungary, and is in talks with Belarus and Pakistan.

Other countries touted as possible IMF recipients include Romania, Estonia, Latvia, and Bulgaria.