News / Economy

Ukraine PM Says $37 Billion Went Missing Under Yanukovich

Ukraine's new prime minister Arseny Yatseniuk chairs a meeting in Kyiv, Feb. 27, 2014.
Ukraine's new prime minister Arseny Yatseniuk chairs a meeting in Kyiv, Feb. 27, 2014.
Reuters
Ukraine's new prime minister said on Thursday loans worth $37 billion had gone missing from state coffers during ousted President Viktor Yanukovich's rule, and he warned that unpopular measures were needed to salvage the economy.

With the hryvnia currency in freefall and growing concerns about the low level of foreign currency reserves, Arseny Yatseniuk said the country urgently needed loans from the International Monetary Fund, which is visiting Kyiv next week.

The scale of alleged theft implied by Yatseniuk in a speech to parliament was jaw-dropping, even for a population now used to tales of Yanukovich's extravagance and lavish lifestyle, including his luxury residence outside Kiev.

The average salary in Ukraine is about $500 a month.

Capital flight

In addition to the missing $37 billion, Yatseniuk said as much as $70 billion had been sent out of the country during Yanukovich's three-year rule, although he did not make clear how much of this capital flight was illegal.

“I want to report to you - the state treasury has been robbed and is empty,” he said before the national assembly voted him in as head of a national unity government.

“Thirty-seven billion dollars of credit received have disappeared in an unknown direction ... [and] the sum of $70 billion was paid out of Ukraine's financial system into off-shore accounts,” said Yatseniuk.

At today's rate, $70 billion is equal to about half of Ukraine's gross domestic product in 2013.

Only 4.3 billion hryvnia - $430 million - was left in government accounts, Yatseniuk said, although the central bank's foreign currency reserves stand at $15 billion.

Tough medicine

Shortly after Yatseniuk spoke, the Swiss government said it would order banks in the country to freeze any funds found to be linked to Yanukovich.

In Ukraine, the situation was so grave that there was no choice but to take “extraordinarily unpopular measures,” Yatseniuk said, looking around the solemn faces in parliament as he listed the depth to which the economy has sunk.

With prospects for foreign aid growing, Ukraine's dollar bond maturing in 2017 rose 1.5 points on Thursday to trade at 91.65 cents on the dollar, while bonds issued by state energy company Naftogaz maturing this September rose one point.

The cost of insuring Ukraine's debt also slid as approval of the interim government opened the possibility of negotiating a deal with the IMF.

An IMF fact-finding team is to visit Ukraine in the coming days, in response to Ukraine's request for help, said Managing Director Christine Lagarde.

Worried investors

The June 2014 government bond weakened, however, signaling the possibility of a short-term default, which has been worrying investors.

The hyrvnia traded as low as 11.0 to the dollar and markets were signaling more depreciation, with six-month currency forwards pricing it at about 12 per dollar.

A former economy and foreign minister, and ex-deputy head of the central bank, Yatseniuk's immediate task is to draw up an anti-crisis plan and secure international aid to prevent a default and shore up the hyrvnia.

Finance Minister Oleksander Shlapak suggested Ukraine wanted a $15 billion aid package from the IMF.

Acting President Oleksander Turchinov had said during the weekend that the country of 46 million people needs more than $30 billion over two years. The previous government had said last year that $20 billion was needed.

Uncertain funding

The fate of a $15 billion bailout package agreed upon with Russia in December is not clear, with Moscow having so far released only $3 billion of the sum promised. Uncertainty also hangs over an agreement that reduced the amount Ukraine pays Russia for gas.

A previous IMF financial package, worth $15.5 billion, was frozen in 2011 after the Ukrainian government reneged on the terms, balking at putting up energy prices, a move that would have been unpopular with voters.

Shlapak and Yatseniuk said IMF money would help to stabilize the hyrvnia. The currency has been falling for weeks - losing more than a fifth of its value - but the drop has accelerated since parliament stripped Yanukovich of his powers and he fled the capital. His whereabouts now are not known.

Tatyana Orlova, a strategist at RBS in London, said the hryvnia could weaken to 16 per dollar if nothing is done, and he added: “A big devaluation is not unjustified for the economy.”

Investment management firm Neuberger Berman said in a research note that many hurdles lay ahead for the Ukrainian economy.

“We are also unsettled by the seemingly endless increases in headline figures needed for Ukraine to avoid default in two years,” it said. “To us, this trend fosters doubt as to the commitment of future leadership to undertake much-needed reforms.”

You May Like

Hezbollah Chief Says Does Not Want War But Ready for One

VOA's Jerusalem correspondent reports that with an Israeli election looming and Hezbollah's involvement in Syria, neither side appears interested in a wider conflict More

Multimedia VOA SPECIAL REPORT: Despite Danger, Best US Minds Battle Deadly Virus

Scientists at America's premier biological research center race in military confinement to find effective drugs, speedier tests and a safe vaccine amid the deadliest outbreak of Ebola in history More

Kurdish Poet Battles to Defend Language, Culture

Kawa Nemir's work is an example of what he sees as an irreversible cultural and political assertiveness among Kurds in Turkey More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Egypt's Suez Canal Dreams Tempered by Continued Unresti
X
Heather Murdock
January 30, 2015 8:00 PM
Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Mobile Infrared Scanners May Help Homeowners Save Energy

Mobile photo scanners have been successfully employed for navigational purposes, such as Google Maps. Now, a group of scientists from the Massachusetts Institute of Technology says the same technology could help homeowners better insulate their houses and save some money. VOA’s George Putic has more.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8845
JPY
USD
117.71
GBP
USD
0.6643
CAD
USD
1.2669
INR
USD
62.019

Rates may not be current.