Lagarde Heaps Pressure on Ukraine in Warning of Bailout Halt
Source: Bloomberg
Pressure on Ukraine’s government, already showing cracks over anti-graft efforts and the war with pro-Russian separatists, was ratcheted up further as the International Monetary Fund warned that the nation’s $17.5 billion bailout risks being halted without progress on reform.
Christine Lagarde, the fund’s managing director, said Wednesday in a statement that it’s “hard to see” how the rescue program can continue successfully without a “substantial new effort” to overhaul governance and combat corruption. Government bonds, at risk from a debt dispute with Russia that Germany’s seeking to mediate, sank after Lagarde’s remarks, the harshest to date on the prospects for Ukraine’s rescue loan.
Ukraine's Other War
The political crisis facing President Petro Poroshenko and his team is worsening as discontent at stalled reforms builds among Ukrainians who fomented a pro-democracy revolution in 2014 and ally nations who’ve pledged billions in financial aid. Frustration within the ruling coalition, which is also still tackling a pro-Russian insurgency in the nation’s east, boiled over last week when reform-minded Economy Minister Aivaras Abromavicius quit, alleging officials from Poroshenko’s party were corrupt.
Bonds Sink
“Ukraine needs Western support to stabilize and reform the country from within,” said Joerg Forbrig, senior program director at the German Marshall Fund of the U.S. in Berlin. “The leadership in Kiev is now at risk of forfeiting this support. Its infighting and opposition to true reforms will reconfirm the skepticism many in the West have.”
Read more: http://www.bloomberg.com/news/articles/2016-02-10/lagarde-warns-ukraine-must-reform-or-risk-imf-program-failing
