IMF studies aid for cash-strapped Ukraine

The International Monetary Fund waded into the fast-moving Ukraine crisis on Thursday, promising to look at providing a lifeline to its embattled economy. Ukraine's newly minted prime minister, Arseniy Yatsenyuk, has requested the world lender of last resort's assistance, IMF managing director Christine Lagarde said. "We are ready to respond," she said, giving de facto recognition of the new Western-leaning government in Kiev following the overthrow of Russian-backed president Viktor Yanukovych over the weekend. Ukraine owes $13 billion in state debt payments this year -- a massive sum in a country where state reserves have shrunk to less than $18 billion. And Kiev has suffered from Russia's decision to freeze a $15 billion dollar bailout package after a first $3 billion tranche was used up. In her statement, Lagarde made no mention of the sum -- $35 billion in Western help -- requested by the Ukraine's new leaders as their economy teeters toward a sovereign default. Lagarde said she would send a "fact-finding team to Kiev to undertake a preliminary dialogue with the authorities." IMF spokesman Gerry Rice told reporters the mission should arrive in Ukraine next week, but declined to say when the IMF could begin to extend any financial assistance. Typically, an aid plan is agreed between authorities and IMF staff before being approved by envoys to the 188-nation body, a process that can take serval months. But growing pledges of support by Western powers could speed things up. The United States, the largest IMF stakeholder, announced Wednesday that it would guarantee $1 billion in loans. US Secretary of State John Kerry promised quick deliver of the guarantees "with some other pieces" to follow. Kerry said the European Union was looking at loan guarantees worth some $1.5 billion for the nation of 46 million people. Any aid would probably be funneled through a mechanism overseen by the IMF which had previously frozen its assistance program because of Yanukovych's refusal to make painful structural changes "The letter we just received does indicate that the new leadership is committed to implement wide-ranging reforms," said Rice. Meanwhile, Switzerland said Thursday it was prepared "in principle" to freeze any funds Ukraine's ousted president Yanukovych might have in Swiss banks. The full decision, which will be published Friday, obliges Swiss banks to show increased vigilance when it comes to Ukrainian funds, foreign ministry spokesman Pierre-Alain Eltschingerhe said. Demonstrators gathered in front of the United Nations's European headquarters in Geneva on Thursday, calling on Switzerland to "stop being passive." Lagarde said the IMF mission would assess the economic situation in Ukraine as well as begin discussions on "the policy reforms that could form the basis of a Fund-supported program. "We are also discussing with all our international partners -- bilateral and multilateral -- how best to help Ukraine at this critical moment in its history," she said. "In that regard, we are encouraged by the many statements of support that have been expressed." Concerns over what would be a catastrophic default saw the local currency take a 9.6-percent plunge to a record low of 11.5 hryvnias against the dollar Thursday.