Bloomberg News

Ukraine Needs to Unblock Frozen IMF Loans, Poroshenko Says

April 09, 2012

Ukraine needs to unblock loans from the International Monetary Fund to attract more investment and boost economic growth, Economy Minister Petro Poroshenko said.

Ukraine will have to work to improve its business climate to achieve “a brave” 3.9 percent economic growth target this year, Poroshenko said in an interview in Kiev on April 5. The IMF froze its $15.6 billion lending program with Ukraine last March after the government refused to raise domestic natural-gas prices to trim the budget deficit.

“I am deeply convinced that the IMF is the only possible way to carry out reforms,” said Poroshenko, who took office on March 23. “Tariffs need to be raised. Let’s talk about transparent plans of compensation. Especially since the winter is over, let’s do it in the summer.”

Ukraine’s gross domestic product slowed to 2 percent in the first two months of the year as demand for its exports weakened on global markets, the central bank said last month. GDP expanded 5.2 percent in 2011. Ukraine is 152nd among 183 countries on the World Bank’s Ease of Doing Business study, placing it below Liberia, Algeria and Tajikistan.

“In the situation of falling metal prices, deteriorating chemicals markets, inflation risks with forthcoming elections, we must put forward adequate market measures,” Poroshenko said.

Poroshenko, 46, whose fortune was valued at $1 billion, owns OOO Roshen, a manufacturer of chocolate and cocoa products and has holdings in agriculture, automobiles, shipbuilding and media, according to Forbes.

Ikea Agreement

“Not many people know, like I do, how many obstacles there are for a transparent business,” Poroshenko said. “The issue of trust is one of the key issues. We have to seek investors’ trust by improving the investment climate, to seek the trust of small and medium-sized businesses, trust from partners in Russia and in the European Union, because we have so far been unpredictable.”

Ikea Group, the world’s largest furniture retailer, opened an office in Ukraine in 2005 and initially planned to build a store near Kiev. It failed to buy the land needed for construction amid disputes with local authorities. Ikea said in March 2009 it may open its first outlet in the southern region of Odessa at the end of 2011.

“An agreement was reached that Ikea is coming to Ukraine,” Poroshenko said. “Ikea is not only a way to have affordable quality furniture; Ikea is a symbol. When Ikea is not allowed to enter the market, it is not Ikea that suffers; it is Ukraine’s image that suffers.”

Beer, Grain

Belarus is considering the possibility of opening its market for Ukrainian beer, Poroshenko said. Ukraine’s export of beer to Belarus slid 77 percent last year from the previous year as its former Soviet partner introduced trading licenses, pushing prices up.

Poroshenko said Ukraine’s winter grains were less damaged by dry autumn and cold winter than previously estimated. He said the country will need to replant more than 2.4 million hectares, according to the latest inspection.

-- Editors: Elizabeth Konstantinova, Paul Abelsky

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net;

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net


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