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

Video Analysts: Beijing Parade a 'Bazaar' of Stolen Technology

Show commemorating victory over Japan in World War II involved long, medium and short range missiles, a range of tanks and 200 fighter aircraft More

Bernie Sanders Surge Reflects US Shift on Socialism

Although most analysts say it is unlikely he will get the Democratic nomination, Sanders' campaign opens up questions and issues that are otherwise marginalized More

Video On IS Frontline, Kurdish Fighters Ready for Offensive

Peshmerga soldiers say although they need more heavy artillery, they are poised to take the fight to the Islamic State extremists on their turf More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Drowned Migrant Toddler Photo Triggers European Outragei
X
Henry Ridgwell
September 04, 2015 11:36 AM
The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Drowned Migrant Toddler Photo Triggers European Outrage

The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Russians Observe 11th Anniversary of Beslan School Attack

This week, Russians have been observing the 11th anniversary of the attack by Islamic militants on a school in Russia's North Caucasus region that killed more than 330 hostages, including 186 children. The three-day siege and massacre that started on September 1, 2004 took place in Beslan, a town in the republic of North Ossetia, and is one of the bloodiest terrorist acts ever in Russia. VOA's Mike Richman reports.
Video

Video Native Americans Debate: Father Serra, Saint or Sinner?

Pope Francis will canonize an 18th century missionary to Spanish California during a papal visit to the United States this month.  But some Native Americans have criticized the elevation to sainthood of the missionary priest, Junipero Serra. VOA's Mike O’Sullivan has more from Los Angeles.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video China Announces Troop Cuts at WWII Parade

Chinese President Xi Jinping Thursday announced plans to cut the world’s largest military force by 300,000 troops. The announcement was made during a massive military parade to commemorate victory over Japan in World War II. The event was shunned by most Western leaders and for some is raising fresh concerns about China’s military ambitions. VOA’s Bill Ide has more from Beijing.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.

VOA Blogs

World Currencies

EUR
USD
0.8978
JPY
USD
119.24
GBP
USD
0.6567
CAD
USD
1.3230
INR
USD
66.495

Rates may not be current.