13:58 Mar. 21, 2016
Ukraine's political gridlock threatens financial stability
Ukraine's political gridlock, already holding up billions of dollars in aid, is also threatening financial stability and postponing monetary easing, according to the nation's central bank governor.
Delays in talks on a cabinet revamp present a further danger to the hryvnia after the currency slumped 9 percent against the dollar this year, Valeriya Gontareva said in an interview. Policy makers need a resumption in Ukraine's .5 billion bailout from the International Monetary Fund to cut their benchmark interest rate and relax capital controls, she said. Early elections could set Ukraine back another half year, she said.
"We've already lost the past six months - we didn't get any financing and we didn't proceed with reforms," Gontareva said Friday in her office in Kyiv, the capital. "To lose another six months in a situation that's critical for the economy isn't acceptable."
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Ukraine is mired in its worst political crisis since deadly protests toppled the former Soviet republic's Kremlin-backed leader, Viktor Yanukovych, in 2014. Stalled reforms prompted the exit of key officials from the post-revolution team and fed tensions between Prime Minister Arseniy Yatsenyuk and President Petro Poroshenko, who's pledged a government overhaul. Bailout disbursements have been halted until the cabinet situation is resolved, with the IMF warning the program may be scrapped altogether without progress to tackle graft.