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IMF: Ukraine needs more financial support

11 october 2014, 10:31

 The International Monetary Fund said Friday that embattled Ukraine will need more financing in addition to what the Fund and European partners have offered in the face of "major uncertainty", AFP reports.

Six months after the $27 billion rescue package was decided for the country -- including $17.1 billion from the IMF -- the ongoing conflict between Kiev and pro-Russia separatists has not abated, and continues to drag down the economy.

"Ukraine's international partners need to start thinking about if they can provide more support for the country," said the IMF's European department head Poul Thomsen.

"We do see a somewhat higher financing need, it's too early to say how much," he said.

On Wednesday Ukraine authorities said the country was asking the IMF for more support. Ukrainian Central Bank chief Valeria Gontareva was to ask IMF Managing Director Christine Lagarde to speed up disbursements under the loan program, and possibly increase the total.

Thomsen did not comment specifically on Kiev's requests, but said that the country had made progress following its reform commitments made under the loan program.

"We do not have the early implementation problems that we had on previous programs," he said.

"Fiscal targets are being met despite the fact that the government obviously cannot collect taxes in part of the country, and despite the fact that there is a need for higher security spending."

But he said the breakdown of a ceasefire between the government and rebels in eastern Ukraine country was taking a toll on the overall economy, sparking more capital outflows.

"Clearly there's a major uncertainty... The conflict is beginning to take a toll on the real sector, on exports and on imports, spilling over into the balance of payments."

Despite the financial strains, Thomsen said that rescheduling the country's debt -- which, though controversial, could potentially ease the government's financial burden -- is not under discussion.

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