1. IMF APPROVES US$16.4 BILLION STAND-BY ARRANGEMENT FOR UKRAINE
News Release: International Monetary Fund (IMF), Wash, D.C., Wed, Nov 5, 2008
2. UKRAINE'S ANTI-CRISIS LEGISLATION
White Paper, Embassy of Ukraine to the USA, Wash, D.C., Wed, Nov 5, 2008
3. BYUT, NUNS & LYTVYN BLOC UNITE TO PASS ANTI-CRISIS BILL
By Natalia Nepryakhina, The Kommersant, in Russian, Kyiv, Ukraine, Fri, Oct 31, 2008
U.S.-Ukraine Business Council (USUBC), in English, Wash, D.C. Thu, Nov 6, 2008
4. ANTI-CRISIS LAW PASSED BY UKRAINIAN PARLIAMENT
UNIAN news agency in Ukrainian, Kyiv, Ukraine, Friday, Oct. 31, 2008
U.S.-Ukraine Business Council (USUBC), in English, Wash, D.C. Thu, Nov 6, 2008
5. PUTTING THE BLOCKADE IN CONTEXT
A Ukrainian Perspective
INFORM, BYuT Newsletter #92, Kyiv, Ukraine, Mon, Nov 3, 2008
6. UKRAINIAN PRESIDENT EXPECTS IMF ASSISTANCE IN TACKLING FINANCIAL CRISIS
Interfax Ukraine, Kyiv, Ukraine, Tuesday, November 4, 2008
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1. IMF APPROVES US$16.4 BILLION STAND-BY ARRANGEMENT FOR UKRAINE
News Release: International Monetary Fund (IMF), Wash, D.C., Wed, Nov 5, 2008
WASHINGTON, D.C. - The Executive Board of the International Monetary Fund (IMF) today approved a two-year Stand-By Arrangement (SBA) for SDR 11 billion (about US$16.4 billion) to help the authorities restore financial and economic stability and strengthen confidence.
The SBA request entails exceptional access to IMF resources equivalent to 802 percent of Ukraine's quota in the Fund, and was approved under the Fund's fast-track Emergency Financing Mechanism. Today's approval enables the immediate disbursement of SDR 3 billion (about US$4.5 billion).
The authorities' program is designed to help stabilize the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence, and to facilitate adjustment of the economy to a large terms-of-trade shock. The authorities' plan incorporates monetary and exchange rate policy shifts, banking recapitalization, and fiscal and incomes policy adjustments.
Following the Executive Board discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, issued the following statement:
"The Ukrainian economy, especially the banking system, is experiencing considerable stress. Falling prices for Ukraine's major export, steel, have led to a substantial deterioration in Ukraine's current account outlook.
"This terms-of-trade shock, along with existing vulnerabilities—high inflation, relatively low foreign exchange reserves compared with short-term external debt, significant exposure of banks to foreign funding, balance sheet mismatches, and a weak underlying fiscal position—interacted with the drying up of liquidity caused by the international financial crisis and led to a significant slowdown in capital inflows.
"The authorities' program, supported by the two-year Stand-By Arrangement with the IMF, aims to restore financial and macroeconomic stability by adopting a flexible exchange rate regime with targeted intervention, a pre-emptive recapitalization of banks, and a prudent fiscal policy coupled with tighter monetary policy. Resolute implementation of the program should help reduce inflation to single digits by the end of the program.
"The flexible exchange rate regime, backed by an appropriate monetary policy and foreign exchange intervention, will help absorb external shocks and avoid disorderly exchange market developments. The recent unification of official and market exchange rates should increase clarity about the regime.
"Recently imposed exchange controls will be phased out as confidence rebuilds. Plans to accelerate progress towards inflation targeting and enhance the independence of the National Bank of Ukraine are important to provide the nominal anchor under the flexible exchange rate regime over the medium term. In the near term, as liquidity pressures diminish, tighter monetary policy will be necessary to guard against inflation.
"A pre-emptive bank recapitalization will alleviate a potential credit crunch that could prolong and deepen the downturn in economic activity. Decisive measures that have been taken to allocate public funds to recapitalize banks and to facilitate bank resolution processes will ensure that problems can be dealt with promptly.
"Increased oversight, more targeted on- and off-site inspections, and improved cross-border supervisory cooperation will help to strengthen the financial system. A proactive strategy to resolve corporate and household debt problems will also be essential to reduce banking sector vulnerabilities.
"A prudent fiscal stance is planned, consistent with both the financing constraint and the need for recession-related social spending. The target of a balanced budget in 2009 will be kept under review in light of the macroeconomic, financing, and revenue outlooks. The targets would be achieved in part by expenditure restraint, and by a phased increase in energy tariffs.
"Ukraine's extensive safety net provides a backstop to protect vulnerable groups, and the program also allows higher funding for unemployment insurance and targeted income support.
"The authorities have developed a strong and comprehensive package of measures to address the challenges Ukraine is facing and the Fund has provided commensurate financial assistance. Decisive measures have already been implemented by the authorities, including the passage of anti-crisis legislation.
Moreover, the authorities' policy framework is sufficiently robust to adapt to evolving circumstances. The commitment of leaders of the main political parties to the core elements of the program increases the prospects for successful program implementation. All these elements give confidence that the program will succeed in stabilizing economic and financial conditions," Mr. Portugal said.
ANNEX
RECENT ECONOMIC DEVELOPMENTS
Ukraine's economy has grown very rapidly since 2000, expanding by more than 7 percent on average. Initially, this reflected the utilization of large excess capacity and increased productivity supported by a series of structural reforms. Since 2005, growth has been propelled by real domestic demand, namely a credit boom driven by strong capital inflows as well as incomes policies that redistributed large terms-of-trade gains to the population.
By mid-2008, the economy was overheating. Credit growth exceeded 70 percent, CPI inflation exceeded 30 percent, wage growth settled in the 30-40 percent range, a buoyant property market pushed valuations to high levels, and imports surged at an annual rate of 50-60 percent. The current account deficit reached 7 percent of GDP in the second quarter of 2008.
The Ukrainian economy also became vulnerable along other dimensions, including high short-term external debt relative to reserves, high exposure of banks to foreign funding, balance sheet mismatches, and a weak underlying fiscal position. Problems came to the fore as commodity prices plunged and the global financial turmoil deepened. These developments have had a considerable impact on the real sector as reflected in the sharp 5-percent contraction of the manufacturing sector in September.
At the same time, a sharp slowdown of external capital flows raised concerns about the ability of banks and corporates to roll over existing credit lines. When the sixth largest bank, Prominvest Bank, was put under receivership, a widespread deposit outflow began with at least US$3 billion—4 percent of deposits—withdrawn during the first three weeks of October.
Confidence in the country's banking system and currency weakened. Intervention by the National Bank of Ukraine (NBU) mounted in October, reducing reserves from US$38 billion to US$32 billion. In addition to providing liquidity, the authorities also imposed a set of exchange controls to stem outflows.
The combination of weaker demand from Ukraine's trading partners, falling export prices, rising import prices, and reduced access to international financial markets are expected to weaken growth prospects. Taking these developments into account, Ukraine's overall financing needs for the next two years are large.
PROGRAM SUMMARY
The authorities' program aims at restoring confidence in Ukraine's macroeconomic and financial stability by addressing the financial sector problems, facilitating adjustment to potentially large external shocks, and reducing inflation. The program is designed to respond flexibly to economic developments.
The program is based on projections that assume a global recession and continued deleveraging in international credit markets in 2009, implying a recession in Ukraine with deteriorating exports, limited external financing and a credit crunch. The projected impact on output—a 3 percent decline—is consistent with Ukraine's experience under similar circumstances in 2004-05.
Under the program, inflation is expected to decrease to 17 percent by end-2009 from the projected 25.5 percent this year. The current account would compress to a deficit level of about 2 percent of GDP from the mid-2008 level of 7 percent.
Assuming a global recovery in the second half of 2009, the Ukrainian economy could be back at its estimated potential growth rate of 5-6 percent by 2011 with inflation at 5-7 percent by late 2011.Current account deficits are projected to remain small in 2010, in light of the weak economy, and to be moderate thereafter, allowing reserves to rise.
The key measures to achieve the objectives of the program focus on the following areas:
[1] MONETARY AND EXCHANGE RATE POLICY
The program supports the implementation of a flexible exchange rate regime to help Ukraine better absorb the external shocks it now faces. Base money will be the near-term anchor for monetary policy until an inflation targeting regime can be implemented.
The independence of the NBU will be strengthened, and in the near term, monetary policy will be tightened to help achieve the 2009 inflation objective of 17 percent. The program envisages eliminating exchange rate controls as soon as possible, and measures to improve the operation of the foreign exchange market, including cancellation of the foreign exchange transactions tax and a more transparent intervention policy.
[2] FINANCIAL SECTOR POLICY
The authorities intend to prepare a comprehensive bank resolution strategy that will include the resolution of problem banks and the recapitalization of viable banks to cushion the real economy from a potential credit crunch. The authorities have already resolved the sixth largest bank, Prominvest Bank, through a sale to a strategic investor.
The program further proposes to ensure that viable banks have access to liquidity; increase deposit insurance coverage to Hrv150,000 (about euro20,000) from the current Hrv50,000, which will cover 99 percent of individual accounts; and strengthen the monitoring of banks, including through enhanced cross-border supervisory cooperation.
[3] FISCAL POLICY
The authorities will adopt a prudent fiscal stance while accounting for the need for recession-related social expenditures, including higher funding for unemployment insurance and targeted income support. Under the program, the deficit would not exceed 1 percent of GDP in 2008, and in 2009, the general government budget would be balanced (excluding bank recapitalization costs).
Even with the substantial increase of 0.8 percent of GDP social spending during the recession, these fiscal targets are deemed attainable. However, given the uncertainties on economic prospects and the availability of financing, the authorities are prepared to adjust the targets as needed.
To achieve their fiscal targets, the authorities are determined to correct the pricing policies in the energy sector and pursue a more balanced incomes policy by adjusting the minimum wage, pension, and social transfer increases in line with the projected inflation in 2009. These measures will help guard against higher inflation and depreciation.
Ukraine has an adequate social safety net in place to protect the vulnerable against adjustment policies, which the authorities are prepared to expand should the need arise.
Ukraine joined the IMF as a member on September 3, 1992. Its quota is SDR 1,372 million (about US$2,049 million).
LINK: IMF news release including statistical charts: http://www.imf.org/external/np/sec/pr/2008/pr08271.htm
2. UKRAINE'S ANTI-CRISIS LEGISLATION
White Paper, Embassy of Ukraine to the USA, Washington, D.C., November 5, 2008
WASHINGTON, D.C. - On October 31, 2008 Ukraine's parliament adopted a package of legislation intended to secure $16.5 bn standby loan from the IMF. The law was backed by 243 lawmakers in the 450-seat.
The parliament approved measures to recapitalize banks, increase guaranteed deposits to 150,000 hryvnias ($25,338) from 50,000 and set up a stabilization fund. All proceeds from the state assets sale and from the state's bonds sale this year and next year will be injected into the fund. Money from the fund will be used for loans to banks and companies to help them to repay their debts to foreign investors.
The banks are also obliged to use their incomes to raise capitalization. The state will buy stakes in the troubled lenders. The law will expire when the situation is stable but no later than Jan. 1, 2011.
The IMF loan and related "anti-crisis legislation" is a key to preventing a financial meltdown, foremost by shoring up confidence in the country's shaky banking sector - main task now is to overcome the first stage of the financial crisis. The Government and the National Bank of Ukraine has now, with approving this law, all the instruments and enough mechanisms to respond and take measures if the situation in the banking system escalates.
The Government while elaborating measures to overcome fallout from the crisis will be guided by principles of “common responsibility, effective coordination and fast response”. Immediate governmental measures are – to control spiraling inflation, reduce its trade deficit and free up its currency from a US dollar peg.
The IMF loan is a key to propping up confidence in the eyes of foreign lenders. GOU and National Bank hope is that lenders will agree to refinance tens of billions of dollars in private sector debt that matures in the next 12 months.
The IMF loan might be not fully tapped. It is considered as “psychological credit” – to demonstrate both for local and foreign investors that National Bank of Ukraine has sufficient reserves of national currency and Bank is able to transact intervention in any point and provide local currency market with dollar’s volume as much as needed.
Measures to address the financial sector turmoil: The NBU actively supported banking sector liquidity through its refinancing operations. In October, it provided UAH 20 billion (about $4 billion) of liquidity support to a number of banks. To build confidence, deposit guarantees were doubled to $20,000 and are planned to increase further.
Furthermore, the NBU has imposed a six-month freeze on the early withdrawal of saving deposits from commercial banks. It introduced tough limitations on commercial banks credit portfolio growth. The foreign currency loans can be made only to borrowers that have foreign currency income. The NBU strengthened its monitoring of external private debt. In particular, it required commercial banks to supply with data on their and their clients’ external debt obligations maturing each quarter over the next 12 months.
The anti-inflationary program relied heavily on monetary measures by the NBU: switching to a managed float in order to reduce forex interventions - the major source of money growth; tightening bank reserve & capital adequacy requirements; increasing the discount rate; carrying out sizable sterilization operations to slow down credit growth.
The Government has approved at the special sitting on October 4, 2008 the Provisional Order of using the Stabilization Fund and an Order on the state’s participation in capitalization of banks.
These are pressing top priority measures of the Government implementation of which will enable protection of the national banking system on normal operating of which the return of the citizens’ deposits and the opportunity to finance the economy depend. If Ukraine succeeds completely to stabilize the national banking system then we can say that Ukraine will return to normal living.
GOU hopes that approval of the mentioned documents will encourage aid attraction from the global financial organizations. All other decisions necessary for preventing the global financial crisis would be considered at the Government’s sitting on October 5, 2008.
National Bank of Ukraine approved unitary hryvnia’s official rate of exchange at the local forex (decree #153 dated of October 5, 2008). All state financial institutions will change over to work with unitary official rate of exchange till the end of this week.
IMF loan is needed as well because of now dozens of factories in Ukraine's export-oriented economy have announced plans to halt production and warned of possible lay-offs. Ukraine's economy has grown impressively in recent years due to strong demand for its main export, steel, strong investments and a credit boom that has been fuelled by heavy foreign borrowing, particularly by the country's banks.
Rising consumption of imports and falling demand for steel have widened the country's current account deficit, in turn putting pressure on the country's currency, which lost some 20 per cent of its value in October.
Ukrainian stock market, with approval of anti-crisis legislation and hope for IMF loan, begins demonstrate rapid growth.
The additional social-oriented anti-crisis legislation package could be elaborated soon for compensation of recently approved by parliament unpopular IMF requirements, including a freeze on social expenditures.
Ukraine is aware that success of anti-crisis program, described in bilateral Memorandum between IMF and GOU, depends from providing the effective mechanism to control for tapping of credits from IMF and other foreign lenders.
3. BYUT, NUNS & LYTVYN BLOC UNITE TO PASS ANTI-CRISIS BILL
By Natalia Nepryakhina, The Kommersant, in Russian, Kyiv, Ukraine, Fri, Oct 31, 2008
U.S.-Ukraine Business Council (USUBC), in English, Wash, D.C. Thu, Nov 6, 2008
KYIV - The Verkhovna Rada passed the bill aimed to minimize the effects of the global financial crisis on the Ukrainian economy. Lawmakers approved the creation of a stabilization fund to guarantee the repayments of deposits by natural persons and banned a 2-year moratorium on the increase of the minimum wage to the subsistence level.
However, experts indicate that the law won’t speed up social payments with regard to inflation rate and express doubt that the stabilization fund will be filled with real money by the yearend.
Following line-item debates on the amendments to the presidential draft, VR passed by 243 votes the draft No. 3309-4 “On priority measures to forestall the negative effects of financial crisis and on some amendments in the laws of Ukraine.” If Pres Yushchenko signs the bill into law, it will be valid till Jan. 1, 2011.
The lawmakers approved the bills major items: the creation of a stabilization fund, banks’ recapitalization, build-up of the Natural Persons’ Deposits Guarantee Fund, and tax breaks for agriculture.
The following procedure was established to form the Stabilization Fund: from the sale of state-owned securities and surplus revenues from the privatization (earlier, it was proposed to pay all the revenues from the 2008 privatization). The revenues from the 2009 privatization will go into the fund in full. The distribution of money from the SF is to be done by the cabinet on coordination with VR committees on the budget as well as on finance and banking.
The lawmakers also changed the banks recapitalization procedure. The present owners of banks will get a preemptive right to buy out additional emission stock, followed by investors and the Finance Ministry. The FM can participate in the formation and build-up of banks’ statutory funds by purchasing their stocks for budget money or state securities. The National Bank of Ukraine will have to buy out state securities at their nominal value for the term of the next 5 days for the money of international credits, that is, for the $16.5 billion IMF loan.
The lawmakers cancelled a provision whereby UkrExImBank’s capital had to be increased by 1 billion hryvnia to buy out a part of the Prominvest bank stock.
It follows that the actual nationalization of the Prominvestbank will be carried out in accordance with the general procedure.
The Natural Persons’ Deposits Guarantee Fund will be built up using 25% of the NBU profits, but not less than 1 billion hryvnia annually. The lawmakers raised the ceiling of guarantees for deposits from 50,000 hryvnia to up to 150,000 hryvnia.
However, the lawmakers did not support the moratorium as of Jan. 1, 2009 through the 2010 yearend on raising the minimum wage to the subsistence level. Consequently, given the financial crisis and the need for a deficit-free 2009 budget, the cabinet will have to find 49.3 billion hryvnia for social programs, deputy head of Yushchenko’s office Oleksandr Shlapak said. The ban on the moratorium does not mean that the minimum wage will be raised on Jan. 1, 2009, as envisaged by the 2009 budget draft.
“When the cabinet has the funding, it can bring the minimum wage to the subsistence level because the change will affect the tariffs,” Oleksandr Zholud, International Center for Perspective Research analyst says. The Korrespondent’s source in the Finance Ministry admitted that the law does not stop the ministry from indexing wages for the rate of inflation. Premier Tymoshenko repeated the statement on Oct. 31.
The creation of the Stabilization Fund does not guarantee that the fund will be able to operate in 2009. “The fund is an empty shell as in 2008 the State Property Fund earned merely 370 million against its 2008 target of 8.5 billion. Can one speak about surplus revenue from privatization?,” our source in the Finance Ministry said. The only viable source for the SF which can pay for the banks’ capitalization is part of the IMF loan as the other projected source (sales of government bonds) is out of the question in the light of recent failures to sell the bonds via auctions.
“That the SF won’t have any sources of funding is a positive development. Due to SF opaque procedures many corrupt schemes may emerge – we know well by whom VR committees are controlled,” says CASE-Ukrayina chief economist Volodymyr Dubrovsky. In a related move, Party of Regions lawmaker Iryna Akimova has insisted that the cabinet and NBU submit to VR a clear-cut mechanism for banks’ recapitalization.
The new law is called by lawmakers the first step towards stabilizing the country’s finance and banking system. The next step should be the support of real economy. Thus, Ms Akimova suggested revitalizing the bill of exchange system and raising depreciation rates for the steel-making and chemical sectors.
BYUT’s Natalia Korolevska agrees with this proposal as it will simplify administering of taxes and VAT rebates: “In particular, the system is good to tax goods in storage. All present supplies of goods stored are considered by the law as sold and are subject to taxation. It should be stopped.”
LINK: http://www.kommersant.ua/doc.html?docId=1051828
4. ANTI-CRISIS LAW PASSED BY UKRAINIAN PARLIAMENT
UNIAN news agency in Ukrainian, Kyiv, Ukraine, Friday, Oct. 31, 2008
U.S.-Ukraine Business Council (USUBC), in English, Wash, D.C. Thu, Nov 6, 2008
KYIV - The bill outlining emergency measures to prevent the negative effects of the financial crisis was passed by Verkhovna Rada. The bill was supported by 154 lawmakers from BYUT, 69 from NUNS, 20 from the Lytvyn bloc. The Party of Regions and Communists abstained.
The law envisages the creation of a stabilization fund from state property sell-off revenues in 2008 as well as from the targeted placement of government securities. The fund money is to be used by the government in coordination with the VR committee on finance and banking and the budget committee.
To ensure banks liquidity, the ministry of finance will be authorized to form or increase the banks statutory funds by buying initial emission stock or additional emission stock in exchange for government bonds and/or for budgetary money. The bonds are subject to mandatory buying out by the National Bank of Ukraine. The cabinet will take its decisions on the banks capitalization on the proposals from NBU.
In addition, the law imposes a moratorium on the distribution of a bank’s net profits earned before Jan. 1, 2011 if a bank shows, within a year for which dividends are calculated, balance losses in the 3 current months.
Under the law, if NBU’s profits exceed its losses in a current budgetary year, the bank is to pay its positive balance in the budget of the year following the year for which the report is prepared. 25% of the bank’s profits, but no less than 1 billion hryvnia, is to be earmarked for the “Guarantee Fund for Natural Persons Deposits,” banks capitalization purposes and the state mortgage institution, with the excess of the losses over profits being compensated from the next year’s budget.
Under the law, natural persons will receive guarantees of repayment of their bank deposits not exceeding 150,000 hryvnia. In addition, in 2008 state guarantees for credits of international financial institutions, amounting to 10 billion hryvnia, shall be provided by the cabinet in line with the budget code.
Under the law, the UkrExImBank is to reinvest in its statutory fund its net profits earned in 2008 and undistributed net profits for the past years, but no less than 500 million hryvnia.
In line with the law, based on monthly reports on the implementation of local budgets, the Finance Ministry will extend 12-month interest-free loans from the state treasury to local authorities. The loans must be used for inter-budgetary transfers to the amount of 2008 local budgets revenue shortfalls. The repayment of medium term loans must be carried out on the results of the year balance report and under the procedure set by the cabinet.
The law will be valid until it is cancelled by VR after reaching financial and economic stabilization but not later than 2011.
LINK: http://www.unian.net/ukr/news/news-281835.html
5. PUTTING THE BLOCKADE IN CONTEXT
A Ukrainian Perspective
INFORM, BYuT Newsletter #92, Kyiv, Ukraine, Monday, November 3, 2008
KYIV - To western eyes it appeared simple. The country was at the brink, staring into the abyss. Teetering on its edge was the president and prime minister, locked in a very public battle; two leaders more concerned about preserving their political futures than the economic well-being of the nation.
One demanded an election in the deluded belief he will play king maker and preserve his presidency, while the other wished to avoid an election which could unseat her as premier. Meanwhile the bronchial cough infecting Ukraine’s financial institutions was about to escalate into a fatal case of economic pneumonia. Something had to give.
Just when it looked like a financial meltdown was inevitable, up popped the International Monetary Fund (IMF), throwing the nation a $16.5 billion lifeline. To grab it, all the feuding couple had to do was to pass some legislation – a few laws to balance the books and curb future spending.
But the deadlock dragged on. It was then that lawmakers from the Bloc of Yulia Tymoshenko (BYuT) sprang into action, blockading the speaker’s podium to prevent a law from being passed that would approve $76 million to fund a December election.
Even the most seasoned western experts rolled their eyes at this subversion of the democratic process, which naturally attracted considerable flak. To all and sundry it looked like BYuT, the last flame bearer of the Orange Revolution, had succumbed to tricks normally associated with Party of Regions.
Few will forget how, in June 2006, the latter used this same stalling tactic to devastating effect. That summer an around the clock blockade bought the time needed to convince Oleksandr Moroz and his Socialist Party to cross the floor and join the Party of Regions and Communists in the Anti-Crisis coalition – paving the way for Viktor Yanukovych’s return as premier.
Nearly two years on, how can BYuT justify the indefensible? Perhaps it should not try to. What it should do is to provide context and explain the extraordinary circumstances that shaped this “last resort” behaviour.
A QUESTION OF NATIONAL PRIORITIES
[1] Firstly, lawmakers will tell you that the primary driver for this action was to force parliament to focus exclusively on tackling the financial crisis. After all, the situation was dire – a case of all hands on the pump. Dallying with elections at this time would be like rearranging the deck chairs on the Titanic.
This view is shared by Volodymyr Lytvyn, leader of his eponymous centrist bloc, which has 20 seats in parliament. Mr Lytvyn was quoted by UNIAN as saying: “If we seriously raise the question of offering resistance to the financial crisis, we should forget about the parliamentary election. But if we nevertheless announce the election, nobody will implement the anti-crisis measures, because the whole executive power will take part in the parliamentary campaign.”
ALLURING ELECTIONS
[2] Secondly, it is assumed that Ms Tymoshenko wants to cling to her premiership. This is true but not for the reasons surmised. Rivals suggest she is desperate to use her position as a springboard for the presidency in 2010. But that argument does not pass scrutiny, not least because the fallout from the economic downturn – which is far from over – will inevitably blight whoever is in office at the time. Indeed, given her strong opinion poll rating versus the president, combined with options for alliances with smaller parties, the prospect of an election appears positively alluring.
According to a poll for the National Institute for Strategic Studies (conducted 20-24 October), if a presidential election was held tomorrow, President Yushchenko would not even make the run-off. Only 9.7 percent of respondents said they would vote for him, while 20.7 percent favoured Viktor Yanukovych and 24.2 percent Ms Tymoshenko.
Similarly, a recent poll by FOM, to gauge the outcome of a parliamentary election, puts BYuT on 31.1 percent, the Party of Regions on 29 percent and the Yushchenko bloc in fourth place with 4.1 percent, behind the Communist Party with 6.6 percent.
Based on these figures BYuT should back elections now! But BYuT has steadfastly maintained that elections are not in the best interests of the country.
NEW ORDER VS. OLD ORDER
[3] There is a third factor to consider. Ms Tymoshenko knows that the longer she remains in office the harder it becomes to turn back the clock. Under her watch, huge inroads have been made into rolling back the black economy. Massive sums lost to the state through smuggling and non-payment of taxes are now being paid and the grip of shadowy middlemen on the gas industry is well and truly broken.
In addition to taking radical action, BYuT has taken conciliatory steps. The dropping of its legal challenge to the president’s election decree and endorsement of the president’s anti-crisis bill point to a willingness to repair bridges. Indeed, Ms Tymoshenko described the vote on the first reading of the anti-crisis bill, as “a good signal that the democratic coalition can be revived, and parliament can effectively function a lot better than it could in the previous few months.”
This determination to not give up on the coalition, when nearly everyone else has, was a contributory factor to the blockade. And whilst BYuT does not endorse an “end justifies the means” philosophy, the stubborn actions of a few will benefit the country. Maybe extraordinary times deserve extraordinary measures. It is at least important to put them into context, and whilst one is not necessarily proud of this last resort tactic, it has focused minds on what is really important.
6. UKRAINIAN PRESIDENT EXPECTS IMF ASSISTANCE IN TACKLING FINANCIAL CRISIS
Interfax Ukraine, Kyiv, Ukraine, Tuesday, November 4, 2008
KYIV - Ukrainian President Viktor Yuschenko has said that he expects the country's political forces,the International Monetary Fund and other international financial institutions to support measures to tackle the financial crisis. He was speaking at a meeting with IMF mission representatives on Friday,the presidential press service reported.
The effects of the global financial crisis for Ukraine and ways to dampen them were the major topic during their meeting. Yuschenko suggested making a joint evaluation of the risks of foreign and domestic economic processes on the Ukrainian market. He said that the Ukrainian economy had already faced crisis situations and managed to cope with them.
"The situation on the foreign and domestic markets is currently difficult,but I'm a total optimist and I'm sure that if we take comprehensive steps,we will find a right answer for depositors,business,and financial system," Yuschenko said.
He also spoke about the consolidated plan of anti-crisis measures that are being drafted by Ukrainian institutions empowered to conduct economic and financial policies. "We currently need a very important dialogue," Yuschenko said.
Participants in the meeting included IMF Mission Head Ceyla Pazarbasioglu,her deputy Mark Flanagan and IMF Resident Representative in Ukraine Balazs Horvath. Participating in the meeting from Ukraine were Finance Minister Viktor Pinzenyk,National Bank of Ukraine Chairman Volodymyr Stelmakh,Presidential Secretariat First Deputy Head Oleksandr Shlapak and Presidential Secretariat Deputy Head Andriy Honcharuk.
