Ukraine and International Monetary Fund.

Why do they need each other?

In early December Ukraine was supposed to resume talks with the International Monetary Fund on restarting cooperation. In this context there was a choice - either to accept the IMF conditions and restore the credit line followed by obtaining tranche under a stand-by program, or seek help from other lenders.

The talks hasn’t resumed yet, while Ukrainian economics urgently needs financial injections.

A tense situation in the global financial markets and uncertainty about the pace of global economic recovery are the present day realities. Therefore, maintaining a stable financial system of Ukraine is a priority.

What are the alternatives?

Ukraine is on the verge of crossing vectors of external economic and political choice. The macroeconomic situation in the country encourages the development of new markets and areas of integration and foreign economic cooperation with countries and international organizations.

But the question is what will be effective for Ukraine?

During the round table at the LIGABiznesInform press center on November 29th experts stressed the importance of the IMF loan for replenishing the gold reserves, improving of financial ratings of Ukraine and accessing to external capital markets. According to the analyst of the Institute of Economics and Forecasting of NAS Eugene Bublyk, loans that Ukraine can get from Russia, Turkey or China, can’t be alternative to cooperation with the IMF. Russian money have a high political price, while China invests in projects employing Chinese labor. In addition, China is interested in tasty piece of fertile Ukrainian land that can feed and accommodate the excess population of the PRC (there is a state program of resettlement of the Chinese, which is not advertised).

Ukraine masses fairly positive history of loan repayment IMFm which is the basis of a good image of the country, and and at the same is signal to count in future not only on loan from the IMF, but also from other foreign investors.

During overall 21 years of cooperation IMF provided Ukraine with $ 19.07 billion and has got back $ 15.27 billion, accounting for 80% of the total amounts of" borrowing. In previous years of cooperation - from 1999 to 2007 – Ukraine’s payments to the IMF exceeded the receipts. In 2002-2007 Ukraine in general could do without loans. Then the payments averaged $ 0.37 billion, and the maximum was $ 0.85 billion in 2000.

In 2012 Ukraine’s payments to the International Monetary Fund were $ 3.74 billion, and by 2013 IMF loans worth $ 5.793 billion were repaid. Due to this, according to the schedule of repayment, the sum to return is much less.

A loan from IMF will not allow partial or complete default. The worst option is the threat of non-payment by the previous tranche, because according to international analytical companies and independent experts in finance at year-end exchange reserves Ukraine amount to 19 billion dollars. Instead, a positive decision of the IMF will allow Ukraine to patch budget holes and increase the purchasing power of Ukraine in the European market.

Opening new credit line will improve the financial situation in the country, which will positively vidznachytsya to assess the credit-rating agencies about the creditworthiness of Ukraine. This, in turn, is a positive signal to potential Western European, American investors and will enable them to confidently invest their money and make a profit. Renewal of Ukraine's cooperation with the Fund means a course for bringing modern energy efficient technologies in industry, reduce dependence on natural gas investments in high-tech and promote export-oriented industries, and hence the increase in trade between Ukraine, including American companies that operate in the Ukraine and the EU and the countries of the Customs Union, to improve product quality.

On one hand, the dynamics of the situation surrounding the launch of a new IMF credit line indicates the lobbying decision-Ukraine Foundation decisions that benefit shareholders of the leading countries. Since November 2012 the IMF constantly need to reform "Naftogaz Ukraine" while the company's budget reform and the establishment of cost-based tariffs for gas and utility services for the population, the transition to a flexible exchange rate of hryvnia and reduce the budget deficit, which in modern terms, particularly in view of the complicated foreign and economic relations between Ukraine and Russia will lead to increased negative sentiment in society and push Ukraine into the arms of Moscow.

If you save functionaries and the leadership of its categorical position, and understanding the need to mitigate the demands on Ukraine, the crisis in the economies of many European countries exacerbated. Foreign Structure and influential multinational companies, including American, have invested in financial instruments markets in Ukraine may lose them due to failure to allocate financial assistance to Ukraine to service external debt. Finally, in case if the fund decides not to give credit to Kyiv, it will undermine its credibility as an institution to modernize the economy of a developing country, and will cause irreversible damage to its reputation.

However, in situations where the issue of foreign influence in Ukraine from Russia is particularly acute, as the chief ideologue of the Customs Union Sergey Glazyev seems to be the only "expert" in European association, IMF loan will make both Ukraine and EU confident in the former's European choice.

Russia currently uses the uncertain position, and perhaps the weakness of the IMF in making decisions regarding Ukraine and gradually undermine the economic situation in Ukraine a loan will reduce the impact of Russian capital in Ukraine economy eliminates dependence on trade wars with Moscow, and thus make European integration aspirations of Ukraine more material.