David Hawley said discussions between the IMF
and authorities in Kyiv were continuing "on the need to find agreement
on how to contain the general government deficit in 2009."
Other
topics under discussion, he said, include monetary policy and
restructuring of the banking system "so that confidence in the banking
and financial system can be restored."
He said he expected an IMF mission to return to Kyiv for more talks, but he did not give a date.
Last
week, the IMF postponed the second $1.9 billion tranche of a $16.4
billion emergency loan after Ukraine fell behind on stabilization
measures needed to receive the aid.
Ukraine is among the
countries hardest hit by the global financial crisis. The economy is
plunging into a deep recession, the national currency has lost 40
percent of its value since late 2008 and the state gas company is
struggling to service multibillion-dollar debts for Russian gas imports.
A failure of the banking system could severely damage European banks that have major stakes in Ukrainian financial institutions.
Ukraine
turned to Russia last week for a $5 billion loan and is seeking aid
from the United States and other major industrialized nations.
"Strong
commitment by the authorities to getting the country`s economy back on
track on the path to sustained growth is the key to success in these
economic programs," Hawley said, "so strong crisis management is
essential."
He said obtaining financial help from other countries would temporarily alleviate financial difficulties.
"A
high deficit could then be considered, which could help boost domestic
demand and smooth the economic adjustment," Hawley said.
The Kyiv government`s 2009 budget is expected to show a deficit of 3 percent of gross domestic product.
International Herald Tribune
