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Ukraine: IMF Loan Still Uncertain

By Tiffany Carlsen

Kyiv, 8 June 1998 (RFE/RL) -- Victor Yushchenko, Ukraine's National Bank chair, said last week (June 4) that Ukraine has met all IMF criteria for obtaining a long-awaited $2.5 billion loan. But most financial analysts remain skeptical.

"Summing up the outcome of May in the broad sense of the program, it can be said that it is going to be a very good basis for the next stages of talks with the IMF mission and a good platform for the assessment of fulfillment of preliminary measures under the EFF (Extended Fund Facility)," Yushchenko told reporters in Kyiv.

The government decided last week to cut the 1998 budget deficit to 2.3 percent from 3.3 percent -- one of the primary loan conditions set by the IMF. However, the plan still needs to be approved by parliament.

According to financial experts, this will prove difficult, largely because the newly-elected parliament has been deadlocked for nearly three weeks, unable to elect a new speaker .

"One of the principal [conditions] was getting the budget deficit down, but parliament has to pass that and they haven't," said Paul Gregory, head of research at Alpha Capital in Kyiv.

Stanislav Coufal, Atlantik East's chief trader in Kyiv, said that more changes need to be made before Ukraine should be granted any long-time assistance from the IMF.

"Maybe they'll get some money for May, but this doesn't solve the problems Ukraine is facing," he said. "The equity market is totally dead. And, there's still no clear idea on what the political situation will be because parliament still hasn't elected a speaker."

Patricia Bartholomew, an economist at Woodcommerz in Kyiv, is more optimistic. "I have information on the conditions for the first twenty days in May and they were all on target," she said.

Bartholomew didn't believe the parliament's inability to approve the budget deficit plan was going to be a stumbling block to getting the loan.

"Both Ukraine and Russia are in a tight situation and I don't think the IMF wants to exasperate that by withholding money," Bartholomew said. "Ukraine's been trying real hard. I think they (the IMF) should give them a chance."

The IMF refused to approve a loan to Ukraine last year because of the country's stalled economic reforms. It also suspended its current aid program in April after the budget deficit in the first three months of 1998 had doubled the planned target of 3 percent.

An IMF delegation is scheduled to return to Ukraine in mid-June, and the fund's head Michel Camdessus will be coming on June 20 to assess Ukraine's progress towards implementing the loan conditions.