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IMF announces Ukraine rescue visit

KIEV: The International Monetary Fund said on Saturday it would dispatch a team to Ukraine to determine just how much extra aid the war-wrecked and energy-starved nation will need to make it through winter.

The nine-day visit due to start on Tuesday comes as Ukraine suffers rolling blackouts and resentment grows over a severe IMF-prescribed austerity drive.

The Fund has helped piece together a $27-billion (22-billion-euro) global rescue package — promising to contribute $17 billion of that sum over two years — in the weeks that followed the February ouster in Kiev of a Russian-backed president.

But it has since said the new pro-Western government may need at least $19 billion in additional assistance should its war against pro-Russian insurgents in the eastern industrial heartland drag on through the end of 2015.

The IMF’s Kiev representative Jerome Vacher said only that “the mission will begin policy discussions with the Ukrainian authorities in the context of the Fund-supported economic reform programme.”

Yet its arrival will also deliver a vote of confidence in the reformist cabinet that President Petro Poroshenko put together after weeks of political infighting that left Ukraine’s Western supporters frustrated and dismayed.

The finance ministry is now headed by Natalie Jaresko — a US citizen who once worked in the State Department and more recently held a senior post in a private equity firm in Kiev.

The Lithuanian investment banker Aivaras Abromavicius will serve alongside her as economy minister. Both were handed Ukrainian passports by Poroshenko just hours ahead of their confirmation by parliament.

“These appointments raise expectations that Poroshenko and (Prime Minister Arseniy) Yatsenyuk are going to move swiftly against corruption and on other key issues that will transform Ukraine’s economy and governance,” said John Herbst of the Washington-based Atlantic Council think tank.

Russian gas payment

The Fund is next due to mete out a $2.7-billion payment that comes on top of $4.6 billion delivered by early September.

The money has been essential for Kiev — its foreign currency and gold reserves last month dropped to less than $10 billion for the first time in nearly a decade because of the draining toll of the war.

The fighting has shuttered the east’s factories and left the rest of Ukraine desperately short of the coal needed to generate electricity used by industries and households.

A deal for Kiev to make up for the shortfall by buying 100 million tonnes of coal from South Africa fell apart this week due to graft charges that led to the arrest of the head of Ukraine’s main state energy firm.

The energy ministry reported on Saturday that an immediate crisis was nonetheless averted because Russia had resumed running the coal trains it had halted at the Ukrainian border without an explanation last month.

The Fund’s money has helped Kiev pay back debts to Russia that should see natural gas flows — halted by Moscow in June because of a price spat — resume within a matter of days.

Russia’s state-run gas firm Gazprom said it had just received $378 million from Kiev that should cover the delivery of one of the four billion cubic metres of gas that Ukraine plans to purchase in the coming months.

“We will provide the volumes Ukraine needs for its domestic consumption,” Russia’s RIA Novosti news agency quoted Gazprom boss Alexei Miller as saying.

But Russia’s “deliveries to Europe will be made using an alternative route,” he added.

The comment underscores Moscow’s commitment to cut off Kiev’s pro-European leader from the fees they generate from Russian gas transits.

Russia this week abandoned plans to build a gas pipeline that would circumnavigate Ukraine by running under the Black Sea.

Yet it still has a link that crosses the Baltic Sea to Germany. Russian President Vladimir Putin said on a visit to Ankara on Monday that he also intended to boost gas exports through Turkey. – AFP

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