Blue &Yellow: Politics and Economics in Ukraine

Ukraine's weak economy has begun to stabilize, with fears of a genral run on the bank diminishing and the hryvnia stopping its slide against the dollar. Its official rate is currenlty at 5.78 to the dollar, in August it was at 4.85 to the dollar. The Rada also passed a key rescue package that the IMF wanted in condition for rescue funds. 

 The package provided for: the creation of a government stabilization fund to help companies repay foreign debts and invest in domestic projects; the possibility of nationalizing problem banks; attracting loans from international financial organizations; and dropping the government’s populist plan to increase minimum wages (Ukrainska Pravda, October 31).

On November 5 the IMF Executive Board approved a two-year $16.4-billion standby loan for Ukraine, the biggest loan ever taken out by the country. The IMF praised Yushchenko’s financial stabilization package. “The authorities’ program, supported by the two-year standby arrangement with the IMF, aims to restore financial and macroeconomic stability by adopting a flexible exchange rate regime with targeted intervention, a pre-emptive recapitalization of banks, and a prudent fiscal policy coupled with tighter monetary policy,” the IMF said (www.imf.org, November 5).---Source Eurasia Daily Monitor Volume 5, Issue 217.