Ukraine Expects IMF Will Resume Lending

KIEV -- Ukrainian Prime Minister Viktor Yushchenko is optimistic that the International Monetary Fund will soon resume loans to his country despite an audit showing Ukraine overstated reserve levels in 1997.

"Ukraine is trusted. ... The Ukrainian president and his policy are regarded as ... a guarantor of the political and economic stability of Ukraine's domestic and foreign interests," Yushchenko told reporters on his return Wednesday from two days in the United States.

His Washington talks were largely devoted to improving Ukraine's tarnished image with the world's richest lenders after a PricewaterhouseCoopers audit last week showed it had overstated its currency reserves by $713 million as it struggled to win loans of $200 million from the Fund. The overstatement represented about a 42 percent embellishment of its $1.7 billion reserves at that time.

The Fund said it would take misreporting "very seriously" but there was no evidence of misappropriation of central bank money. Yushchenko headed the central bank at the time the reserves were overstated.

The Ukrainian government reacted calmly to the IMF criticism. "The last audit showed that some [central bank] indicators had been overstated," First Deputy Prime Minister Yury Yekhanurov said after the audit results were released. "This is a matter of interpretation.

"The government and National Bank did not violate any instructions," he said. "The prime minister will give his explanations to the IMF in this respect."

Yushchenko, who told Cable News Network on Monday the problem lay in differences between Soviet and current accounting methods, met IMF head Horst K?hler and said the government and Fund were "moving toward each other" on the issues.

The IMF has withheld new tranches of a loan it suspended eight months ago over lax implementation of reforms, pending release of the audit results.