New Ukraine Leader Says Country in Steep Economic Decline
February 24, 2014
Ukraine's interim president says his country faces serious economic problems that began long before the deadly street protests against ousted president Viktor Yanukovych.
Acting President Oleksandr Turchynov said Sunday night that the country is in a steep economic decline, even as many of the world's economies are advancing.
"On the background of the world economic recovery, Ukraine is rolling down into an abyss and is a pre-default state," he said.
Ukraine's finance ministry said Monday that it needs $35 billion to survive this year and next, and some of the money is needed in the next week or two. The interim government is looking to the United States and the European Union for financial help, with the International Monetary Fund possibly financing an aid package.
U.S. Treasury Secretary Jacob Lew said there was broad support from leaders at a weekend G-20 meeting of the world's largest economies for IMF-based assistance, but only after a transitional Ukrainian government is established by parliament. He underscored the need for Ukraine to undertake government reforms.
Kyiv governments have long struggled with corruption and bad government. Ukraine's economy has relied on cheap natural gas supplies from Russia, which could be at risk with the ouster of Yanukovych. His rejection of closer EU ties and embrace of Moscow three months ago touched off the street demonstrations that led to his fall.
Yanukovych turned down a free trade and association agreement with the EU and instead accepted $15 billion in Russian assistance, a package Moscow has put on hold with the political uncertainty in Kyiv.
In his speech Sunday, Turchynov said the Ukraine "must return to [the] family of European countries," while also recognizing "the importance of our relations with Russia."
Ukraine, with 44 million citizens, had a $174 billion economy in 2012, according to the U.S. Central Intelligence Agency. Its $7,300 per person economic production ranks 137th in the world.
It has a significant industrial base and substantial natural resources, including rich farmland. But its economy plunged sharply in the world economic downturn in 2009, dropping 15 percent. The CIA said it was "among the worst economic performances in the world."
Earlier this month, the Fitch financial services firm downgraded the country's credit rating. Fitch said the political uncertainty in Kyiv has contributed to weakening confidence in the country's currency, the hryvnia, and noted that its value had fallen 7 percent against the U.S. dollar since the first of the year.