Translated material
Neither warm nor cold
Kyiv is looking for a lender of last resort
With each passing day of the New Year, Kyiv’s ability to make the next payment for Russian gas supplies looks increasingly doubtful. Emissaries of Yulia Tymoshenko's government spent the entire past week in Washington negotiating with the leadership of the International Monetary Fund. Ukrainian officials had one single goal - to persuade the IMF to urgently pay the next tranche of the loan, at least $2.3 billion. As the country's President Viktor Yushchenko admitted on Saturday, the government is looking for money “to pay off debts for gas.”The IMF is obviously in an extremely difficult situation - perhaps the fund has not experienced similar problems since 1999, when it had to stop lending to Russia amid the anti-terrorist operation in Chechnya. Now in Ukraine there is a full-scale political crisis, aggravated by the election campaign. The authorities are taking on more and more unsupported social obligations, despite the fact that there is no sign of an approved budget for next year, and the draft budget is such that it would be better not to have one. These circumstances, to put it mildly, are not conducive to the continuation of lending. And in any other situation, the IMF would most likely have taken a pause at least until the election results were summed up. But now the situation is such that the fund can also be accused of irresponsible behavior - Ukraine is clearly in a state of economic crisis, and its lack of funds to pay for gas could provoke a new energy crisis on a European scale.
As you know, the presidential elections are scheduled for January 17 (coincidentally, the voting will take place exactly one year after the memorable international gas conference held in the Kremlin, which put an end to the gas crisis). And the next payment to Gazprom (about $840 million) must be made no later than January 11. Perhaps, at the moment, all parties are interested in Naftogaz of Ukraine being able to make the payment. But the money has to come from somewhere.
The IMF decided to provide Ukraine with a loan of $16.4 billion in November last year. And he did it reluctantly. It is significant that even then, in the wake of attempts to flood the pockets of the crisis with cash injections, no one joined the attempt to save the Ukrainian economy (for example, at the same time an anti-crisis package was formed for Hungary with the participation of the IMF and the European Union) - the political risks seemed disproportionately large. Over the past period, Kyiv has received three tranches totaling $12 billion, has adjusted the cooperation program more than once, and is now waiting for the final tranche to be provided.
So far, events do not allow us to conclude that the fund will dare to make political decisions. The Ukrainian delegation led by Deputy Prime Minister Grigory Nemyrey returned from Washington with nothing. Moreover, the only person who can make decisions at the IMF that do not fit into traditional mechanisms - the fund's managing director Dominique Strauss-Kahn - has not even met with the Ukrainians, preferring to go to Europe for these days. TASS sources in the fund, commenting on publications about the suspension of lending to Kyiv, noted that no new decisions regarding cooperation with Ukraine have been made in recent days. From a formal point of view, the IMF staff responsible for Ukraine must complete the next review of the Ukrainian economy and, if the program is being implemented successfully, bring up the issue of allocating the next tranche to a meeting of the fund’s board of directors. But so far, the issue of Ukraine is not on the agenda of the meetings of the board of directors, which will be held this week today, Wednesday and Friday.
Grigory Nemyrya, returning from Washington, said that there are still chances to receive the next (fourth) tranche of the IMF loan before the end of the year.
In recent months, Ukraine has been paying for Russian gas solely thanks to anti-crisis support from the IMF - not only thanks to loans from the fund, but also thanks to the sale of SDRs received from it (special drawing rights, or special drawing rights - the IMF unit of account). In September, the fund, as part of the fight against the global crisis, carried out an emergency issue of SDR, distributing it among its shareholders. It was assumed that these funds would go to the reserves of countries, and those of them who had problems with the balance of payments would be able to exchange SDR for hard currency through a special mechanism. Of course, countries such as Ukraine immediately cashed in the resources that fell from the sky. This made it possible, in particular, to make the December payment to Gazprom. But these funds have already run out.
Viktor Yushchenko, who already criticizes Mrs. Tymoshenko's office every day, also criticized the ongoing negotiations with the IMF - they say that the government is taking out too many loans, which will have to be repaid to children and grandchildren. However, it is difficult to imagine that the Ukrainian president, even if he wishes the worst for his political rivals, is seeking a new gas crisis.
In this situation, Moscow may have to play an active role. If the IMF remains adamant, and the Ukrainian authorities are powerless (for them, in truth, the date of January 11 is much less important than election day), the Kremlin and Gazprom will have to decide for themselves how to prevent a supply stop.