500-million loan from IMF won’t save Ukraine - Academician Semynozhenko

October22200811:01

The cabinet’s reaction to economic crisis was belated. The country’s main problem lies in the fact that the cabinet cannot fight on two fronts: first, with the president who is dead set on having snap elections, and, second, that the cabinet cannot work effectively under the circumstances. That is why the best way-out for the cabinet is to set up a special council of experts to help draft cabinet’s decisions. Verkhovna Rada must not relinguish its work for a single day despite the president-declared snap elections, head of The Ukrainian Forum and Academician Volodymyr Semynozhenko told ZIK Oct. 21.

Commenting on the president’s proposal to create a stabilization fund from privatization revenues, V. Semynozhenko said: ”The idea makes sense. But selling off state property today is a risky undertaking, as due to the cash-strapped world economy Ukraine won’t have top buyers. Privatization, therefore, does not seem to be a viable source for the stabilization fund.”

The stabilization fund, he continued, should have $20 to $30 billion, the amount that will help to do more than merely to patch up the holes in the economy. Borrowing money is not the best option for Ukraine as the country’s ratings plummeted.

“Expectation of the IMF loan will produce a positive result, but $500 million a year is too little for Ukraine. On the other hand, to negotiate a $5-billion loan will take up so long that by the time the loan is received it will be too late to save the economy,” he added.

The crisis is more intense in Ukraine due to such domestic factors as raw materials-oriented industry, dependence on exports, and domestic debt.

He predicts that the first stage of the economic crisis in Ukraine will last for 2-3 years, with several years more to overcome its consequences.