News / Europe

Ukraine Interim Leader Warns Economy in Steep Decline

EU, IMF Vow Assistance for Battered Ukraine Economyi
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February 24, 2014 11:52 PM
Ukraine’s economy appears on the brink of collapse, following historic developments this weekend that saw the ouster of its Russian- backed president, Viktor Yanukovych. But Western creditors who met at the G20 in Australia say they’re ready to help. The International Monetary Fund says it’s prepared to lend support but says reforms are a prerequisite for any financial support. More from VOA's Mil Arcega.

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Ukraine's interim president says his country faces serious economic problems that began long before the deadly street protests against ousted president Viktor Yanukovych.

Acting President Oleksandr Turchynov said Sunday night that the country is in a steep economic decline, even as many of the world's economies are advancing.

"On the background of the world economic recovery, Ukraine is rolling down into an abyss and is a pre-default state," he said.

Ukraine's finance ministry said Monday that it needs $35 billion to survive this year and next, and some of the money is needed in the next week or two. The interim government is looking to the United States and the European Union for financial help, with the International Monetary Fund possibly financing an aid package.

U.S. Treasury Secretary Jacob Lew said there was broad support from leaders at a weekend G-20 meeting of the world's largest economies for IMF-based assistance, but only after a transitional Ukrainian government is established by parliament. He underscored the need for Ukraine to undertake government reforms.

Kyiv governments have long struggled with corruption and bad government. Ukraine's economy has relied on cheap natural gas supplies from Russia, which could be at risk with the ouster of Yanukovych. His rejection of closer EU ties and embrace of Moscow three months ago touched off the street demonstrations that led to his fall.

Newly-elected speaker of parliament Oleksandr Turchynov, who on Sunday assumed interim presidential powers, is seen in the parliament building in Kyiv February 22, 2014.Newly-elected speaker of parliament Oleksandr Turchynov, who on Sunday assumed interim presidential powers, is seen in the parliament building in Kyiv February 22, 2014.
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Newly-elected speaker of parliament Oleksandr Turchynov, who on Sunday assumed interim presidential powers, is seen in the parliament building in Kyiv February 22, 2014.
Newly-elected speaker of parliament Oleksandr Turchynov, who on Sunday assumed interim presidential powers, is seen in the parliament building in Kyiv February 22, 2014.
Yanukovych turned down a free trade and association agreement with the EU and instead accepted $15 billion in Russian assistance, a package Moscow has put on hold with the political uncertainty in Kyiv.

In his speech Sunday, Turchynov said the Ukraine "must return to [the] family of European countries," while also recognizing "the importance of our relations with Russia."

Ukraine, with 44 million citizens, had a $174 billion economy in 2012, according to the U.S. Central Intelligence Agency. Its $7,300 per person economic production ranks 137th in the world.

It has a significant industrial base and substantial natural resources, including rich farmland. But its economy plunged sharply in the world economic downturn in 2009, dropping 15 percent. The CIA said it was "among the worst economic performances in the world."

Earlier this month, the Fitch financial services firm downgraded the country's credit rating. Fitch said the political uncertainty in Kyiv has contributed to weakening confidence in the country's currency, the hryvnia, and noted that its value had fallen 7 percent against the U.S. dollar since the first of the year.

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by: 1stworldview from: texas
March 18, 2014 4:34 AM

The invasion of the Ukraine by Russia is sending a ripple effect through out Eastern Europe. With the prospects now for possible cold war starting all over again investors brace for sanctions against Russia. And with the already falling economy of the Ukraine, investors and business are bailing out as fast as they can.

During the next few years, the Ukraine economy will be pushed to its limits. Currently, the Ukraine desperately needs 30 billion in loans to survive, and with ousted former president Viktor Yanukovich having already pulled the country out from the European Union, and the new government wanting nothing to do with Russia, the government will be in dire straits.

The US State department has issued a travel warning urging Americans not to travel to the Ukraine. Tourism is a huge part of Ukraine economy. with hotels, airlines and restaurants depending on tourism. As these businesses cut back, the ripple effect in cities like Kiev, Odessa and Yalta will have devastating consequences on the economy. Just as when the housing market died in the US, the effects were felt world wide. Not only will Ukraine's economy continue to decline, but most of Western Europe's fragile economy will also feel the effects.

One industry that seems to thrive on the situation is the foreign bride market, A Foreign Affair operates four office in the Ukraine. Kenneth Agee the marketing director says, "In the last few weeks we have seen the biggest surge ever on women signing up. Not only have we seen the biggest surge, but we have seen the highest quality of women signing up; doctors, engineers, even some of Ukraine's most beautiful models, With the possibility of war looming over the horizon, American men are looking very desirable." A Foreign Affair 's new member Irina of Kiev says, "America is stable, American men have very good family values. These are important to Ukraine women; we want a good environment to raise our families. With Russian tanks rolling down our streets, I do not see a bright future here for starting a family.

The future does not look good for the Ukraine. Russia has no intention of letting Ukraine have complete independence. Most western Ukrainians have had a strong dislike for Russia for many generations, and will do what ever it takes to resist Russian influence or occupation. This being said, the country will have a long battle and many lines drawn in the sand, from serious economic sanctions to full out war. At this time, it looks like this struggle could go on for a decade or more.

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