Wed, Feb 26, 2014 - Page 1 News List

Ukraine delays vote to form government amid bailout rush

Bloomberg

Ukraine’s national flag flies at a make-shift memorial for those killed in recent violence in Kiev yesterday.

Photo: Reuters

Ukraine delayed selecting a national unity government as its interim leader struggles to fend off default after former Ukrainian president Viktor Yanukovych’s ouster last week.

Acting Ukrainian President Oleksandr Turchynov pushed back a parliamentary vote to tomorrow from yesterday as he attempts to win agreement with protest leaders who orchestrated the revolt.

He indicated on Monday that a new administration should be formed quickly to secure as much as US$35 billion in financial aid.

“Ukraine’s economy needs rescue and that adds pressure on the revolutionary political forces to create a truly national unity government,” IHS Global Insight senior economist Lilit Gevorgyan said by e-mail.

With Yanukovych on the run after weeks of anti-government protests turned deadly, Ukraine’s new leaders are grasping for a financial lifeline as Russia weighs the fate of a US$15 billion bailout it granted in December last year.

The US and the EU have pledged aid to the new administration.

Russia says it will not meddle in Ukraine’s affairs and urged the West to do likewise.

While Ukrainian assets have benefited from the momentum for financial aid, government bonds snapped three days of gains.

The new government should be largely technocratic and should avoid “political quotas,” said Oleksiy Haran, a member of the Maidan Council, which represents the protesters whose three-month campaign toppled Yanukovych.

Lawmakers yesterday moved quickly to appoint Stepan Kubiv, the ex-chairman of Lviv-based VAT Kredobank, to head the central bank after voting out Ihor Sorkin. Kubiv plans to invite an IMF mission, the Unian news service reported, without giving details.

The central bank imposed capital controls this month to stem the hryvnia’s slide.

While a new government needs to be in place before Ukraine can receive aid, an EU proposal should come by the start of next week, European Parliament Foreign Affairs Committee boss Elmar Brok said yesterday in Strasbourg, France.

Acting Ukrainian Finance Minister Yuriy Kolobov proposed calling an international conference of donors with the EU, the US and other countries.

The EU wants Russia to join a consortium of lenders to Ukraine, Luxembourg Minister of Foreign Affairs Jean Asselborn said yesterday in televised remarks.

Russia will honor all its agreements with Ukraine, including an accord for cut-price gas shipments, Russian Prime Minister Dmitry Medvedev said, according to comments yesterday on the government Web site.

Even so, he said he had questions about the legitimacy of many Ukrainian state institutions and warned that his country’s interests are under threat.

The Russian Ministry of Foreign Affairs said Yanukovych’s opponents broke a peace deal on Friday last week and threatened the stability of the nation.

In the city of Simferopol in the largely Russian-speaking Crimea region, crowds gathered outside the regional parliament demanding its speaker denounce the new authorities in Kiev and consider a referendum on possible adhesion to Russia.

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