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. Last Updated: 07/27/2016

Kuchma Hints at Slowing Reform Pace

UZHGOROD, Ukraine -- Ukrainian President Leonid Kuchma has signaled a shift in reforms toward supporting industry and social needs, easing monetary policy and reopening talks with the International Monetary Fund.


Kuchma, once director of Europe's largest missile plant, appears to have heeded the calls of Ukraine's powerful industrial lobby, which has long sought policy changes to jolt the former Soviet republic out of prolonged stagnation.


In a speech in western Ukraine on Wednesday, Kuchma said a government plan to be presented next month "will implement deep corrections in economic reforms, increasing stimulation of production and its social orientation."


"We are talking about resolving in the second half of the year the decline in production," he said. "To achieve this goal we must take a complicated and responsible step -- correct the earlier parameters of monetary stabilization and move to an easing of monetary policy."


He said Ukraine faced a danger "of failing to maintain price stabilization and simultaneously sinking into a new cycle of production declines. We cannot allow this."


"It is necessary to begin talks with the IMF, which is extending us credits under the existing program," he added.


The country needed to help its strategic industries, including aerospace, shipbuilding and the farm sector, he said. Those producing unwanted goods faced restructuring or closure.


Ukraine has been promised $1.8 billion in credits from the IMF on the strength of a reform program drawn up by Kuchma -- the first plan since independence in 1991. It also calls for a reduction in the budget deficit to less than 5 percent.


This month's Group of Seven leading industrialized nations summit in Halifax offered $2 billion more in aid. Kuchma said he hoped Ukraine would no longer require international credits by 1998.


Stringent monetary controls have helped reduce monthly inflation from 72 percent last November to 4.8 percent last month. The interim karbovanets currency has stabilized after being in freefall for much of the post-Soviet period.


But industrial output continues to decline.


Factories stand idle because of uncertain energy supplies and a payments crisis in which producers and workers have gone unpaid for months. Kuchma, elected Ukraine's second post-independence president last July, has been applauded in the West for launching reforms. But he has hinted in recent months that "adjustments" were likely to take account of public opinion.


Separately, Interfax reported that 8,000 medium- and large-sized enterprises and 22,450 small enterprises are slated for privatization this year, according to a recent presidential decree.


Vladimir Bilko, director of the Ukrainian State Property Fund Privatization Programs Department, also told the news agency that foreigners could compete, before the end of 1995, with Ukrainians in the privatization of state enterprises on equal terms.