News / Europe

IMF Predicts Unsettled Ukraine Will Meet Its Debt Payments

Ken Bredemeier
The International Monetary Fund (IMF) is sending loan money to Kyiv to help the embattled Ukrainian government boost the country's weak economy. But as Ukraine seeks to root out long-standing corruption in the government and block Russian intervention in eastern Ukraine, even the IMF said the loan approval could be risky.

The director of the IMF's European department, Reza Moghadam, told reporters Thursday that the Washington-based agency expects Ukraine to meet all its financial obligations, even as it teeters on the brink of bankruptcy. That includes $2.2 billion it owes Russia for natural gas purchases.

The IMF announced a $17 billion loan package for Ukraine over the next two years, and the World Bank, the European Union, Japan , Canada and the United States have pledged another $15 billion. The loans come with a requirement that Kyiv undertake economic reforms, including tax hikes, wage freezes and cuts in social aid.

But Moghadam acknowledged that the $17 billion IMF loan is not as big as it appears. He said $5 billion of the figure is meant for Ukraine to pay back money it already owes the IMF from a previous loan.

With Ukraine's weak economy, its struggle to maintain control of mostly Russian-speaking eastern Ukraine and Russian troops massing just across the border, Moghadam had a blunt assessment of the current state of Ukrainian affairs.

"The degree of uncertainty is very large," said Moghadam.

One expert on former Soviet republics like Ukraine, University of New Hampshire political scientist Lionel Ingram, says in a VOA interview that the IMF was right to be wary of sending more money to Ukraine.

"If I were the IMF, I'd be very, very careful about providing money to Ukraine. On the other hand, if I were the IMF, I'd understand the dire necessity of at least trying to help," said Ingram.

U.S. Vice President Joe Biden, who recently visited Ukraine, condemned Russian intervention there in a Washington speech this week. But he also leveled criticism at Ukraine, saying corruption is one reason Kyiv is struggling.

"The corruption is incredibly corrosive. It may not be politic to say, but it is a reality," said Biden.

The IMF's Ukraine mission chief, Nikolay Gueorguiev, says the agency sees improvement in Ukraine's effort to combat corruption.

"We already see major progress in this area, admittedly from a low starting point," said Gueorguiev.

He said Ukraine has undertaken some reforms , including preventing illegal domestic production of alcohol.

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