<TABLE cellSpacing=0 cellPadding=0 width=596 border=0><TBODY><TR><TD colSpan=3 height=26></TD></TR><TR><TD vAlign=top width=5> </TD><TD vAlign=top width=591 colSpan=2>Crisis-hit Ukraine seeks IMF emergency loan
Posted: 18 October 2008 0243 hrs
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</TD></TR><TR><TD vAlign=top height=60> </TD><TD class=update vAlign=top height=60><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD width=138 bgColor=#f6f6f6>Photos </TD><TD width=47 bgColor=#f6f6f6>1 of 1</TD><TD width=18 bgColor=#f6f6f6><INPUT id=btnPrev disabled onclick=Prev(); type=image height=15 width=18 src="http://www.channelnewsasia.com/images/butt_previous.gif" value="<< Previous"></TD><TD width=19 bgColor=#f6f6f6><INPUT id=bntPlay onclick=Play() type=image height=15 width=19 src="http://www.channelnewsasia.com/images/butt_stop.gif" value="Play - Stop"></TD><TD width=18 bgColor=#f6f6f6><INPUT id=btnNext disabled onclick=Next(); type=image height=15 width=18 src="http://www.channelnewsasia.com/images/butt_next.gif" value=" Next >> "></TD></TR></TBODY></TABLE>
Viktor Yushchenko (R) shakes hands with IMF envoy Ceyla Pazarbasioglu</TD></TR><TR><TD> </TD><TD class=update> </TD></TR><TR><TD> </TD><TD></TD></TR></TBODY></TABLE>
KIEV : Ukraine held crunch talks Friday on an emergency loan from the IMF to prop up its fragile banking system, but moves to address the economic crisis were overshadowed by deepening political strains.
Prime Minister Yulia Tymoshenko, who is locked in a fierce battle with President Viktor Yushchenko over his decision to call fresh polls, said the loan of up to 14 billion dollars was "essential" to bail out the country.
As the talks continued with the International Monetary Fund, global ratings agency Fitch downgraded Ukraine's credit rating and issued a stark warning about the ex-Soviet republic's economic outlook.
"The downgrade reflects Fitch's concern that the risk of a financial crisis in Ukraine involving a large depreciation of the currency, further stress in the banking system and significant damage to Ukraine's real economy is significant and rising," the agency said in a statement.
Tymoshenko on Thursday linked the outcome of the IMF talks to the cancellation of the December 7 parliamentary elections, which have become the subject of a bitter political tug-of-war.
President Viktor Yushchenko on October 9 ordered the snap general elections. Tymoshenko immediately contested the order.
For Ukraine to receive credit, "it is necessary to postpone the elections, something the International Monetary Fund said in its statement," news agencies quoted Tymoshenko as saying ahead of the loan talks.
The cabinet has blocked funding needed for the elections and a court suspended Yushchenko's order. On Friday, Yushchenko's backers said a higher court had overturned the earlier ruling and said the elections could go ahead.
Amid the infighting, the deputy chief of the country's central election commission, Andriy Magera, indicated the timing of the elections remained in doubt.
"All deadlines for appropriate preparation for voting expired long ago," Magera told Interfax-Ukraine news agency in an interview.
Earlier, both Yushchenko and Tymoshenko expressed hopes the IMF loan deal would go through.
The IMF was "ready to give Ukraine a loan amounting to 14 billion dollars for the stabilisation of our state's financial sector," Yushchenko's office said in an announcement of his meeting with the IMF team.
Tymoshenko had earlier met with the head of that team, Ceyla Pazarbasioglu.
"We are very interested in our cooperation resulting in Ukraine receiving essential financial assistance from the IMF," Tymoshenko said in a statement.
Ukrainian parliament speaker Arseny Yatsenyuk separately met with Pazarbasioglu and told her that Ukrainian authorities were planning to nationalise ailing commercial banks in Ukraine.
Yatsenyuk told the IMF official that "nationalisation of commercial banks was to be performed in order to save the Ukrainian banking system," the Ukrainian parliament said in a statement published on its website.
Local IMF representatives declined Friday to comment on the negotiations.
Ukraine stopped early withdrawals from savings accounts this month in a bid to halt a run on banks. The central bank has bailed out several banks and the Ukrainian stock market has lost more than 70 percent of its value this year.
Such problems have made the country one of Europe's most vulnerable emerging economies, according to Capital Economics analyst Neil Shearing.
"The turmoil in global markets has raised concerns about a funding crisis in emerging Europe, with some investors fearing that Hungary could be the next Iceland (when) in fact Ukraine appears the more vulnerable to a balance of payments crisis," Shearing said in a statement.
This was made worse, he said, by the political crisis that led President Yushchenko to call the December 7 general election after the collapse in September of the pro-Western coalition government.
"Once political risk is factored in, Ukraine could be most vulnerable to a balance of payments crisis, despite the fact that its overall external deficit is smaller," Shearing said.
- AFP /ls
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Posted: 18 October 2008 0243 hrs
<TABLE cellSpacing=0 cellPadding=0 width=260 align=right border=0><TBODY><TR><TD align=right width=20> </TD><TD align=right width=240>
Viktor Yushchenko (R) shakes hands with IMF envoy Ceyla Pazarbasioglu</TD></TR><TR><TD> </TD><TD class=update> </TD></TR><TR><TD> </TD><TD></TD></TR></TBODY></TABLE>
KIEV : Ukraine held crunch talks Friday on an emergency loan from the IMF to prop up its fragile banking system, but moves to address the economic crisis were overshadowed by deepening political strains.
Prime Minister Yulia Tymoshenko, who is locked in a fierce battle with President Viktor Yushchenko over his decision to call fresh polls, said the loan of up to 14 billion dollars was "essential" to bail out the country.
As the talks continued with the International Monetary Fund, global ratings agency Fitch downgraded Ukraine's credit rating and issued a stark warning about the ex-Soviet republic's economic outlook.
"The downgrade reflects Fitch's concern that the risk of a financial crisis in Ukraine involving a large depreciation of the currency, further stress in the banking system and significant damage to Ukraine's real economy is significant and rising," the agency said in a statement.
Tymoshenko on Thursday linked the outcome of the IMF talks to the cancellation of the December 7 parliamentary elections, which have become the subject of a bitter political tug-of-war.
President Viktor Yushchenko on October 9 ordered the snap general elections. Tymoshenko immediately contested the order.
For Ukraine to receive credit, "it is necessary to postpone the elections, something the International Monetary Fund said in its statement," news agencies quoted Tymoshenko as saying ahead of the loan talks.
The cabinet has blocked funding needed for the elections and a court suspended Yushchenko's order. On Friday, Yushchenko's backers said a higher court had overturned the earlier ruling and said the elections could go ahead.
Amid the infighting, the deputy chief of the country's central election commission, Andriy Magera, indicated the timing of the elections remained in doubt.
"All deadlines for appropriate preparation for voting expired long ago," Magera told Interfax-Ukraine news agency in an interview.
Earlier, both Yushchenko and Tymoshenko expressed hopes the IMF loan deal would go through.
The IMF was "ready to give Ukraine a loan amounting to 14 billion dollars for the stabilisation of our state's financial sector," Yushchenko's office said in an announcement of his meeting with the IMF team.
Tymoshenko had earlier met with the head of that team, Ceyla Pazarbasioglu.
"We are very interested in our cooperation resulting in Ukraine receiving essential financial assistance from the IMF," Tymoshenko said in a statement.
Ukrainian parliament speaker Arseny Yatsenyuk separately met with Pazarbasioglu and told her that Ukrainian authorities were planning to nationalise ailing commercial banks in Ukraine.
Yatsenyuk told the IMF official that "nationalisation of commercial banks was to be performed in order to save the Ukrainian banking system," the Ukrainian parliament said in a statement published on its website.
Local IMF representatives declined Friday to comment on the negotiations.
Ukraine stopped early withdrawals from savings accounts this month in a bid to halt a run on banks. The central bank has bailed out several banks and the Ukrainian stock market has lost more than 70 percent of its value this year.
Such problems have made the country one of Europe's most vulnerable emerging economies, according to Capital Economics analyst Neil Shearing.
"The turmoil in global markets has raised concerns about a funding crisis in emerging Europe, with some investors fearing that Hungary could be the next Iceland (when) in fact Ukraine appears the more vulnerable to a balance of payments crisis," Shearing said in a statement.
This was made worse, he said, by the political crisis that led President Yushchenko to call the December 7 general election after the collapse in September of the pro-Western coalition government.
"Once political risk is factored in, Ukraine could be most vulnerable to a balance of payments crisis, despite the fact that its overall external deficit is smaller," Shearing said.
- AFP /ls
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