Ukrainian President Viktor Yushchenko signed a bill on Friday that would raise the minimum wage by over 20 percent — a move the International Monetary Fund chief said pushed its $16.4 billion bailout “off-track.”
Uncertainty over IMF funding for Ukraine, one of Europe’s worst performing economies, prompted credit ratings agency Standard & Poor’s to cut its outlook to “stable” from “positive”, while Fitch said the wage rises would pressure its own already low ‘B’ rating.
Prime Minister Yulia Tymoshenko has said the wage rises would place “an atom bomb under the finances of the country” and would cost an extra $10 billion.
But Yushchenko told reporters: “I would like to inform you that I have signed the bill.”
Analysts have said the issue has become a political football ahead of a Jan. 17 presidential election in which Yushchenko, his bitter rival Tymoshenko and former premier Viktor Yanukovich will run.
IMF chief Dominique Strauss-Kahn reacted to Yushchenko’s decision swiftly, telling Reuters it concerned him greatly.
“I’m very worried by the president’s agreement to this bill which puts the programme we had signed off track and in this situation I’m afraid it would be very difficult to complete the next review of the programme,” he said by telephone.
“That’s why we are going to continue working with the Ukrainian authorities in the hope they can come together again to reach a position which would comply with the technical agreement we signed with the government.”
The government has said it simply cannot afford the extra spending.
Now Tymoshenko and government have always been for the IMF help, Yanukovych and PoR have always been against it……..and Yushenko, like so often during the past 5 years has flip-flopped on the issue and has now derailed the program.
This would be the same Yushenko who recently said to the world Ukraine was the place to invest…….well obviously not if you want to rely on signed agreements and contracts it isn’t when the Presdient knowingly derails the biggest outside assistance program for the nation for no real reason. After all, he has done sweet f*ck all about the social funding during his last 5 years in office……..until now.