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IMF Chief 'Concerned' About Corruption Charges In Ukraine

IMF Managing Director Christine Lagarde says she is concerned about corruption alleged by a Ukrainian economy minister who resigned.
IMF Managing Director Christine Lagarde says she is concerned about corruption alleged by a Ukrainian economy minister who resigned.

International Monetary Fund (IMF) chief Christine Lagarde said she is concerned about the sudden resignation this week of Ukraine's reformist economy minister, citing government corruption.

"I would like to pay tribute to his efforts. His recently announced resignation is of concern," Lagarde said on February 4 when questioned about the resignation of Aivaras Abromavicius to protest alleged influence-peddling and graft by a top ally of Ukrainian President Petro Poroshenko, among others.

"If the allegations that he makes in his resignation are correct, then it's obviously an indication that the anticorruption measures that were committed by the government are not yet working," the IMF managing director said.

The IMF is the main source of rescue financing for Ukraine as the cash-strapped country contends with crises ranging from falling commodity prices to a new trade embargo by Russia, its main market for agricultural and industrial goods in the past.

The fund has a $17.5 billion bailout program for Ukraine that is conditioned on the government enacting free-market economic reforms and fighting corruption.

"There's more progress to be had in this area," Lagarde said. "A lot of work needs to be done, and it has to be implemented vigorously because the Ukrainian authorities are not only accountable to the Ukrainian people but also to the international community."

While Lagarde did not discuss the status of its loan program for Ukraine, Kyiv is hoping the IMF will decide soon on disbursing a third tranche of loans of $1.7 billion, which has been delayed since October.

Ukraine is battling an economic depression which saw the economy shrink by more than 10 percent last year, a downturn made worse by its war against pro-Russian separatists, who have taken control over parts of the country's eastern industrial heartland.

The IMF and other western lenders in Europe and the United States are apprehensive about Ukraine's instability amidst war and recession. Abromavicius is the fourth reform-minded minister to tender his resignation since Ukraine's 2014 break in ties with Russia and shift toward Europe.

Last-Ditch Talks

"The consequences of his announcement are hard to predict, but it's clear that they are very negative," a Kyiv lawmaker from Poroshenko's faction told the Reuters news agency. "It could lead to the postponement of the IMF tranche."

Poroshenko held last-ditch talks with the Lithuanian-born Abromavicius on February 3 in a bid to change his mind and reassure him that all his charges would be investigated in full.

But there was no indication afterwards that the minister had changed his mind, although the government announced that three other Ukrainian cabinet members who had previously tendered their resignations said they would remain in their posts.

Poroshenko arranged a meeting with ambassadors from the Group of Seven economic powers on February 4 to reassure them, while Prime Minister Arseniy Yatsenyuk held an emergency cabinet meeting to try to repair the damage and demonstrate unity in the deeply divided government.

Yatsenyuk said the government was determined not to stray from its reform drive. "Our principle is one for all and all for one. We came as a united team and we will work as a united team," he said.

"We end to blackmail, political pressure, [and] under-the-table dealings for positions of ministers, their deputies, or the heads of state companies," he said.

The health, agriculture, and infrastructure ministers, who had previously tendered their resignations after Abromavicius's announcement, said they would continue to work provided they were allowed to pass reform initiatives without political interference.

But Parliamentary Speaker Volodymyr Groysman said Ukraine was entering a "deep political crisis" and called for a government reshuffle. One legislator raised the prospect of holding a vote of no confidence in the government.

With reporting by Reuters, dpa, and AFP
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