Ukraine Reaches for I.M.F. Rescue Loan

KIEV, Ukraine — Ukraine’s Parliament put aside weeks of political infighting on Wednesday to give initial approval for legislation that would secure an emergency loan from the International Monetary Fund to help ease the country’s ailing finances.

The global financial crisis has battered Ukraine, and the country badly needs the $16.5 billion loan that was promised by the fund last week. But the money was offered on the condition that Ukraine take steps to tighten its budget.
Lawmakers agreed in a vote of 248 to 2 to pass those measures. Two more votes are required for final approval, and while the package is expected to pass, a deepening political crisis raised broader questions about Ukraine’s stability.
“We are giving a signal to the U.S. government and the I.M.F. that the government, president and most of the Parliament intend to deal with the economy,” said Ivan Kirilenko, a deputy in Parliament.
But the market seemed skeptical. Ukraine’s currency, the hryvnia, lost about 14 percent of its value on Wednesday alone, and the cost to insure Ukrainian government debt has spiked, up sixfold since September.
“Until Ukraine can develop and communicate a reasonable anti-crisis plan to the markets, the hryvnia will be under pressure,” said Arthur McCallum, an analyst at Kazimir Partners in Kiev, a fund manager focused on the states of the former Soviet Union.
The I.M.F.’s representative in Kiev, Balazs Horvath, said, “It is a process that will take a few more days, but progress has been made.”
Earlier this month, President Viktor A. Yushchenko issued a decree dissolving Parliament and the cabinet, and calling for early elections in December. His ultimate aim, his critics say, is to get rid of his prime minister, Yulia Tymoshenko, a powerful politician and a former ally.
It is a post-Soviet story of grim familiarity. The two stood together leading the mass demonstrations against a rigged election in 2004 that became known as the Orange Revolution. But since then, their relations have deteriorated, with each publicly accusing the other of betraying their past ideals.
The legislation for the loan, meanwhile, had been held hostage to this political struggle, which got physical twice over the past week. On Tuesday, deputies from Ms. Tymoshenko’s party stormed the podium in Parliament trying to prevent a measure on financing the elections to come to a vote.
On Wednesday, several deputies nearly came to blows, shouting and grabbing to stop others from voting for the measure. At one point, Arseniy Yatsenyuk, the speaker of Parliament, shouted helplessly, “The head of the Parliament is still in charge!”
The scuffle ended in success for Ms. Tymoshenko’s bloc, which erupted in cheers when the measure went down to defeat — four votes shy of passage.
But the fight is not over yet. Ksenia Lyapina, a deputy from Mr. Yushchenko’s party, Our Ukraine, dismissed the rowdy opposition deputies as “monkeys from the jungle,” and said her party intended to insert the legislation into the package intended for the I.M.F., before the final rounds of voting on Thursday, casting a shadow over the fate of the package once again.
Ms. Tymoshenko, meanwhile, parried attacks from another big political player, the Regions Party, which was staunchly opposed to the financial legislation all along, arguing that its plan to save the country’s finances — which centered on demanding longer term loans from the I.M.F. and increasing social payments — was better.
Ms. Tymoshenko dismissed the plan as “one and a half pages and three points” and chided the party for its leader’s absence from the session. A deputy shot back that he was sick and running a temperature.
Mr. Yushchenko, for his part, continued to press the issue of the election on Wednesday, declaring that the actions of the opposition bloc that Ms. Tymoshenko leads had “destroyed trust and made it impossible for the coalition to exist.”
“I, as the president, won’t take a single step back from a democratic way of resolving that problem,” he said.
But his opponents strongly disagree, saying that his decision to force early elections was simply a classic method of bare-knuckle bullying.
“The president is playing a dark game,” said Volodymyr Polokhalo, a member of Ms. Tymoshenko’s bloc. “This election is political extremism.”
Mr. Yushchenko’s critics say he has an oversize sense of his own power, calling for an election at a time when two Kiev-based polling firms put his popularity at 4 to 5 percent. Mr. Polokhalo uses a line from “The Gambler” by Dostoyevsky to explain it: “Poisoning yourself with your own personal fantasies.”