IMF Supports Ukraine

• 05.13.2015, 17:20
•  Region,  World

A committee of Ukraine’s biggest creditors delivered a new detailed proposal to Kiev in order to restructure debt and to avoid a principal haircut that is a main objective for international creditors. The creditor committee said that it had not seen "substantive engagement" by Kiev over initial proposal. Ukraine needs to get savings totaled around $15 billion through debt restructuring, which is a part of International Monetary Fund backed economic turnaround package. As creditors have opposed the haircuts, $23 billion worth of debt was allocated for restructuring the debt, UK News reports.

The group of creditors said that they are ready for formal discussion over the new plan, because the committee has delivered a detailed restructuring proposal which is based on IMF assumptions. The mission of IMF of arriving to Kiev was to review progress of its $17.5 billion loan that is given for four years. Ukraine will receive the second tranche of about $2.5 billion loan after reviewing current program situation.

The overall assistance program totaled $40 billion; it includes a $17.5 billion IMF loan and other $7.5 billion in bilateral assistance.

The Finance Minister of Ukraine Natalie Jaresko suggested having a conversation directly with one of the most known committee member to accelerate and focus negotiations, but she was told that the members are unavailable for the moment. The Finance Ministry also added that the committee focuses on the liquidity aspect which is only one of the three targets for the debt operation and the committee refuses to acknowledge the debt sustainability objective. The three targets for the dept operation include liquidity, sustainability and payment capacity and all of them are very important issues. But the committee of creditors refused to response to finance ministry’s statement over the debt operation measures.

The situation in Ukraine reminds that of in Greece now. Greece is also under the burdens of IMF loan and other European creditors. As the case in Greece shows the country is in deadlock because of payment capacity, Ukraine will not be exception. Moreover there is a crisis in the country now and it will need more and more support form IMF and the debt will enlarge during the time. In this case the loan from IMF is not a solution for Ukraine.