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Ukraine Minister Says IMF Aid On Hold Until Political Crisis Over

Ukrainian Finance Minister Natalie Jaresko says the IMF has put aid on hold until it sees whether the current government survives.
Ukrainian Finance Minister Natalie Jaresko says the IMF has put aid on hold until it sees whether the current government survives.

The International Monetary Fund (IMF) has put aid to Ukraine on hold until it becomes clear whether the current government survives, the country's finance minister says.

The government is reeling from the abrupt exit of its economy minister last week, and Finance Minister Natalie Jaresko's comments on Ukrainian ICTV show how the political crisis threatens to derail Ukraine's relationship with creditors that have provided a lifeline to the recession-wracked country.

Low approval ratings for the government of Prime Minister Arseniy Yatsenyuk have raised expectations of a major ministerial reshuffle. The government also could face a no-confidence vote in parliament in the middle of February.

Ukraine has been waiting since October for the IMF to dispense more aid as part of a $40 billion package from the IMF, the European Union, and the United States. Aid payments are linked to Ukraine adopting reforms that make its economy more competitive and reduce corruption.

Even before the political crisis resistance to the reforms had delayed the disbursement of a third tranche worth $1.7 billion.

Jaresko said the cash-strapped nation was paying a heavy price for the political turmoil set off by the abrupt resignation of Economy Minister Aivaras Abromavicius last week, citing corruption within the ruling party.

The IMF "is not political, but they will wait until it becomes clear who the executive authorities are and whether these authorities will take the responsibility to fulfill the conditions under which they have already provided us with $6.7 billion," she told ICTV on February 8.

"They can provide [aid] to another government, but another government must take the responsibility and commitment that we took on a year ago," she said.

Abromavicius in quitting said he would not become a "puppet" for corrupt vested interests, and accused a close ally of President Petro Poroshenko of trying to hijack control of his ministry.

His departure put a spotlight on Ukraine's fitful efforts at enacting the reforms promised by the Western-backed government when it came to power in 2014. The IMF, the United States and other Ukraine backers in the West had viewed Abromavicius as a leading reformer.

IMF managing director Christine Lagarde last week said Abromavicius's resignation was "of concern," but mentioned no changes to Ukraine's funding program.

Ukraine relies on money from the IMF, the United States and the European Union, to stay afloat. Its economy shrank by more than 10 percent last year, dragged down by a deep recession and war against Russia-backed separatists, who have taken control of parts of the country's eastern industrial heartland.

With reporting by Reuters, ICTV, and Ukraine Today
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