Ukrainian politicians 'far' from compromise on IMF issues

Presidential Secretariat Deputy Head Oleksandr Shlapak said yesterday that the president and prime minister were still ‘far’ from a compromise on issues that would pave the way for a restart of work with the International Monetary Fund this year. The announcement came after officials from the government, central bank and presidential secretariat met yesterday. On the line is a fourth, USD 4 bln, tranche from the IMF that was due to be allocated this month and a new EUR 900 mln loan from the European Union, which is contingent on Ukraine’s further work with the IMF. One of the most contentious issues is a law recently signed by the president and passed by the Verkhovna Rada that instituted gradual increases in social standards beginning November 1; the law was opposed by the Prime Minister and IMF. Brad Wells: President Viktor Yushchenko appears deadset on sticking with the social standard increases and has made no move to indicate he might reconsider. Yushchenko’s motivation appears to be twofold: political dividends with voters ahead of the election and to spurn fellow candidate Yulia Tymoshenko, whose government will have difficulties financing the budget deficit without the new international funds (see yesterday’s flash note for more). Yushchenko’s behavior looks like it will continue to be governed by these two forces – his approval rating according to recent public opinion surveys remains in the low single digits and he is seen as a long-shot to win a second term, let alone make it to the second round of voting.