IMF Talks In Danger Unless Ukraine Parliament Acts: Speaker

KIEV, Ukraine -- Ukraine's talks to secure credit from the International Monetary Fund could collapse unless parliament acts to pass measures to ease the effects of the global financial crisis, the chamber's chairman said on Friday.

Ukrainian Parliament Speaker Arseniy Yatsenyuk is one of the bright stars on the Ukrainian political scene.
A package proposed by the government calls for amendments to the 2008 budget, borrowing of $2 billion from unnamed international financial institutions, sovereign guarantees to firms seeking foreign credit and creating a stabilisation fund.

"It is very important for us to achieve results in a vote on the financial crisis," Arseniy Yatsenyuk told the chamber, which was deadlocked for the fourth day.

"Failure to get a result will have as a consequence the collapse of talks with international financial organisations."

An International Monetary Fund mission has been holding talks for more than a week in Kiev on extending credit that Ukrainian officials say could amount to up to $14 billion.

The Fund has offered no comment on the talks, but says the mission will remain in Kiev "as long as is required".

Yatsenyuk said no consensus could be reached on six draft laws to tackle the crisis, including the package proposed by Prime Minister Yulia Tymoshenko's government.

A working group was set up to draft a document able to command a majority. Debate would resume next Tuesday.

Tymoshenko, speaking later outside the chamber, said: "Getting assistance from international financial organisations in the next few days depends directly on passing this package of anti-crisis laws."

Credits, she said, "will not put Ukraine in difficulty. On the contrary, they allow us to invigorate the banking system."

GOVERNMENT PACKAGE

The crisis has put pressure on the hryvnia currency, which has lost 20 percent of its value in a week and was trading at record lows to the U.S. dollar. It has also placed in doubt the stability of banks to refinance debt.

The deputy head of the central bank, Anatoly Shapovalov, said the hryvnia had lost ground due to "panic" and saw no need for a devaluation. The bank, he said, could force exporters to sell dollars on the interbank market but only as a last resort.

Pressure grew to break deadlock over the package after a new downgrade of Ukraine's sovereign rating by agency Standard and Poor's.

The agency warned that new downgrades could be forthcoming "if there are significant delays in reaching agreement with the IMF or if the lack of an internal political consensus undermines the government's ability to implement an IMF programme".

Parliament has been thrown into disarray over proposals to combine debate on the crisis with measures to finance an early election called by President Viktor Yushchenko.

Tymoshenko, at odds for months with the president, opposes the election and members of her bloc have milled about the chairman's rostrum to curtail debate.

The president dissolved parliament this month and called a Dec. 7 election to the assembly after the collapse of a government team linked to the 2004 "Orange Revolution".

He lifted the dissolution order this week and said he was putting the election back for a week to Dec. 14. It remains unclear when the poll will take place.

A group of prominent Ukrainians, including scientists, politicians, soccer star Andriy Shevchenko and tennis player Andrei Medvedev, urged the president to call off the election.

The group urged politicians to "forget party allegiances and take on the consequences of the crisis rather than each other".

Source: Interactive Investor