Ukraine’s newly minted central bank head and prime minister have said they hope to receive international financial aid soon and right now they have enough foreign currency reserves to cover their debt repayments.
Prime Minister Arseniy Yatsenyuk said he has spoken to the US and the EU about credit and additional foreign currency.
He told reporters at a news conference at the central bank that the interim government is determined to make the reforms called for by the International Monetary Fund in return for loans: “A key priority is resuming the programme of collaboration with the International Monetary Fund. And we will fulfill all the conditions, I repeat, all the conditions, that are necessary for this loan, and Ukraine’s parliament and the coalition will vote for the laws that are necessary for receiving this money.”
IMF officials are due in Kyiv next week for talks with Ukraine’s new leaders, who have said the heavily indebted country needs at least 35 billion dollars over two years to avoid bankruptcy.
IMF chief Christine Lagarde said right now everyone should keep calm: “We need to rely on facts, we need to rely on the situation as it is, we do not see anything that is critical, that is worthy of panic at the moment. We would certainly hope that the (Ukrainian) authorities refrain from throwing lots of numbers which are really meaningless until they’ve been assessed properly.”
The don’t panic advice did little to reassure Ukrainians who continue to hit the cash machines, withdrawing money at a break-neck pace.
The central bank said people can take out as much as they want in the local currency – the hryvnia – which has fallen dramatically in value during the crisis.
But foreign currency withdrawals have been limited to the equivalent of $1,500 – just over 1,000 euros – per day.
European Union assessment
A small team of financial experts from the European Commission will travel to Ukraine on Monday to assess exactly how much financial assistance it needs, EU officials said.
The team from the Commission’s directorate-general for economic and financial affairs is expected to meet Ukrainian finance ministry and central bank officials to determine what the country’s budget shortfall and capital needs are.
“The first thing we need to do is to understand precisely how much they need,” said a senior official briefed on the visit. “There are a lot of numbers being thrown around and it isn’t helping to clarify the situation.”
Officials said that once Kiev had reached a deal with the IMF, the EU could disburse an earlier promised amount of 610 million euros in aid. Together with the IMF loans, that would cover Ukraine’s immediate needs.
In a low-key statement Russia’s President Vladimir Putin ordered his government to work with Ukrainian and foreign partners to find a financial package to shore up Ukraine’s collapsing finances.
The question now for Russia is how much to spend to help the Slavic, Orthodox Christian neighbour and its crumbling economy.
“No matter what Russia does, Kiev will be firmly pro-Western. The only question left is are we prepared to pay more for this course or not?” said Alexei Pushkov, a Putin loyalist and a senior member of parliament.
The Kremlin said in its statement Putin had ordered his government “to conduct consultations with foreign partners, including the International Monetary Fund, on the provision of financial aid to Ukraine”.
The Kremlin statement offered little insight into the mind of a man who hoped Ukraine would play a central role in his project for a trade bloc stretching from the frontiers of China to the edge of the EU.
But it spoke volumes to his attitude towards Western support for the new leadership in Ukraine, and contained a veiled warning along the lines of – if you hold talks on rescuing Kiev from bankruptcy without us, Moscow will act.
Russia looks unlikely to press on with its $15-billion bailout for Ukraine, which had been seen as a reward for Yanukovich’s decision to spurn a trade deal with the European Union in favour of closer ties to Moscow.
“For him (Putin), Kiev no longer exists. There was an agreement with Western countries which those Western countries did not fulfil. I think that is uppermost in his thoughts,” said Gleb Pavlovsky, a former Kremlin spin doctor.
“He was tricked and he has to punish that.”