Ukraine does not need IMF's help

The visit of the IMF mission to Kiev, which was supposed to take place on August 29, has been delayed till October. The meeting, at which officials were supposed to discuss the conditions of a new loan for Ukraine, has been postponed for a third time already. Kiev received the last tranche from the IMF - $1.5 billion - in December 2010. This year, Ukraine was supposed to receive $3 billion.

The Ukrainian government does not seem to be concerned about the delayed meeting. Ukrainian PM Nikolai Azarov said last week that Ukraine did not need another tranche from the International Monetary Fund.

"Are we having any problems now? We do not need money now. If we need it, we will go to Washington, describe our conditions, fulfill them and get the tranche. There are no obstacles for it," the Ukrainian prime minister said.

However, Andrei Blinov, a Ukrainian economist, does not share the views of the prime minister. Ukraine needs another tranche from the IMF to pay debts to Russia's VTB bank, he told Rosbalt news agency. Ukraine raised $2-billion loan from VTB in 2010 for six months. The loan has not been paid back, and Russia does not make its Ukrainian partners hurry. However, Russia can bring up the debt issue during a bad time for Kiev, the analyst believes.

In addition, there is a question of unstable demand for export products of Ukrainian enterprises, which may aggravate the position of the Ukrainian currency. If this happens, Ukraine will have severe problems with paying debts and raising new loans.

"To a certain extent, Azarov was right when he said that Ukraine would be able to do without IMF's tranche. The nation's gold and currency reserves give the country an opportunity to stay afloat. However, a refusal from the IMF means that Ukraine does not execute all requirements of the Fund. This will complicate the process of receiving new borrowings from other countries," Blinov said.

For the time being, the financial situation in Ukraine seems to be stable. The country performs its obligation at the expense of its own resources. On the other hand, Kiev does not rush to meet key requirements from the Fund - to raise tariffs on gas and continue the reforms of the pension system. The Ukrainian government does not intend to raise prices on natural gas for the population this year at all (by 10 and then 20 percent).

In June, the Ukrainian prime minister said that Kiev may for ask a stabilizing loan from the IMF in case the price on natural gas imported from Russia grows considerably.

Ukrainian officials do not refuse the idea of discussing additional discounts with Gazprom. The country also develops a program to cut the consumption of the Russian gas.

As for the pension reform system, Ukraine's PM stated that the reform would not be conducted "especially for the IMF. The law was passed on July 8 and was expected to come into effect in September this year. The law raises the pension age for women to 60 years. The document raises the pensionable service to 30 years for women and to 35 years for men. Male state officials will be able to retire at 62.

Sergei Nikolaev.