United States, International Monetary Fund offer help to battered Ukraine economy

PUBLISHED : Monday, 24 February, 2014, 4:37am
UPDATED : Monday, 24 February, 2014, 5:38pm

The United States and the International Monetary Fund have offered to help Ukraine in rebuilding its battered economy following devastating protests that have plunged the country into its worst crisis since independence.

Fears that Ukraine's debtladen economy is facing default have sparked panic on markets, with bond yields rising sharply and the hryvnia currency losing a tenth of its value in the span of a few weeks.

US Treasury Secretary Jacob Lew said he held talks with Russian Finance Minister Anton Siluanov at the G20 meeting in Sydney after the Ukraine parliament voted on Saturday to oust President Viktor Yanukovych.

"The United States, working with other countries, stands ready to assist Ukraine with its efforts to return to a path of democracy, stability and growth," Lew told a press conference.

If the Ukrainian authorities were to ask for IMF support ... we stand ready
IMF chief Christine Lagarde

"We hope that the resolution of the violence in Ukraine will lead to a new inclusive multiparty, technocratic government willing to make the economic reforms needed.

"The IMF remains in the best position to help states like Ukraine deal with their economic challenges," Lew said.

IMF chief Christine Lagarde said after the G20 meeting that the IMF would also stand ready to help Ukraine, noting the country was an IMF member.

"So if the Ukrainian authorities were to ask for IMF support, whether it's policy advice, whether it's financial support together with economic reform discussions, obviously we stand ready to do that.

"We will be ready to engage, ready to help with the diagnosis of the current situation ... before we of course try to go further and play the catalytic role that the IMF typically plays in such situations," Lagarde said.

There is uncertainty over whether Moscow will keep paying out a US$15 billion bailout it promised to Kiev, with the latest tranche of Russian aid suspended pending a return to calm.

The Standard & Poor's ratings agency predicted on Friday that if Russia scrapped the bailout, Ukraine would default on the US$13 billion of debt it is due to repay this year.

In Washington, a senior US State Department official said Secretary of State John Kerry had spoken with Russian Foreign Minister Sergei Lavrov and agreed on the need "to resolve the situation on the ground without violence".

Kerry "expressed the importance of encouraging Ukraine to move forward on a path towards constitutional change, de-escalation, the creation of a coalition government, early elections and rejection of violence", the official said.

Kerry "reiterated the view that Russia, the United States and appropriate European and international organisations must work together to support a strong, economically prosperous, unified, and democratic Ukraine", the official added.

US President Barack Obama held "constructive" talks on Friday with Russian counterpart Vladimir Putin as he pressed for swift implementation of a deal to end Ukraine's crackdown on protesters.

Putin and Obama agreed that the Ukraine agreement needed to be swiftly implemented and that all sides should refrain from violence.