Europe bank waits for IMFaccord on Ukraine

Europe bank waits for IMFaccord on Ukraine

Bloomberg
"It depends on whether there is an agreement" between Ukraine and the IMF, Mirow said in an interview in London late Tuesday. "We are ready to invest more than 1 billion euros ($1.27 billion) in Ukraine’s financial system and real economy if there is an agreement with the IMF."

The London-based lender said on Feb. 18 it is ready to invest 500 million euros into as many as 20 Ukrainian banks.

Ukraine, with Romania, Hungary and Latvia, was forced to seek a bailout after the global financial crisis stifled investment, shook the banking system and sent the currency into a tailspin. The second installment of Ukraine’s $16.4 billion IMF loan, expected last month, was delayed indefinitely after the government said it’s targeting a budget deficit of 5 percent of gross domestic product, in breach of IMF conditions.



Sharp downturn

Ukraine’s economic contraction this year will bring to an end nine years of growth and is exacerbated by a power struggle between Prime Minister Yulia Timoshenko and President Viktor Yushchenko. The economy may shrink 12 percent this year, Standard & Poor’s credit analyst Frank Gill said on March 6.

The World Bank, the EBRD and the European Investment Bank said on Feb. 27 they will provide as much as 24.5 billion euros to help central and eastern European banks and businesses cope with the crisis. The EBRD will provide about 6 billion euros, the EIB about 11 billion euros and the World Bank about 7.5 billion euros.

Hungarian Prime Minister Ferenc Gyurcsany said on March 3 he wants the EBRD to change its charter, enabling it to lend and invest as much as three times its 20 billion euros of share capital.

"That would not be our proposal for shareholders for the time being," said Mirow, adding that they "are able to cope with the duties with the capital" they have. "Currently, we’re discussing with our board how to make more efficient use of the capital we have. But if shareholders think we should do much more in the east than we are doing now, then the question might be raised," he said.