Ceyla Pazarbasioglu, the IMF's mission chief, said a decision on the loan would be taken by the fund's executive board in the next three to four weeks "pending the completion of prior actions" by the Ukrainian authorities, including approval of amendments to banking legislation in parliament.
Meanwhile, Bloomberg mentions the political paralysis currently in the Rada over a dispute on raising the minimum wage.
The situation is aggravated by clashes between President Viktor Yushchenko, Timoshenko and the parliament ahead of January 2010 presidential elections. The opposition, led by former Prime Minister Viktor Yanukovych, who wants closer ties with Russia, has physically blocked the parliament since last week, demanding to raise social spending.
Tymoshenko discussed the IMF forecast, but focused on the lower inflation expected this year (13% instead of 16%). She also pledged to implement the anti-crisis program that the IMF has asked for before it releases the next tranche. Unfortunately, the GDP contraction is of greater concern. Ukraine's economy, even with IMF assistance, has gotten worse. An AFP article notes, Ukraine is "one of the world's worst hit countries in the global economic crisis." The budget is also projected to rise from 4% to 6%, apparently a result of Naftogaz's own budget deficit. The next tranche, says Tymoshenko, will partly be used for foreign debt redemption.
The prime minister is therefore unwilling to hold early Rada elections in this economic environment. As of now, her strategy seems to be to hold control of the Rada and hope she can pull off a victory in the presidential election. By the time of the next election, January 17 2010, the economy may have improved enough that the BYuT leader doesn't face a strong political backlash. Of course, other political scandals may emerge or perhaps some other issue that could knock out the coalition.
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