European Bank for Reconstruction and Development (EBRD) President Thomas Mirow said the bank will offer support to Ukraine’s banks only after the country resumes cooperation with the International Monetary Fund.
It depends on whether there is an agreement between Ukraine and the IMF, Mirow said in an interview in London late yesterday. “We are ready to invest more than Euro 1 billion ($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 February 18 it is ready to invest Euro 500 million 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 per cent of gross domestic product, in breach of IMF conditions.
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 per cent 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 February 27 they will provide as much as Euro 24.5 billion 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 Euro 20 billion 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.
