Oct 18 (Reuters) - The campaign for Ukraine's first presidential election since the Orange Revolution will begin on Monday. Voters hope the Jan. 17 poll will end five years of political squabbling and paralysed decision-making in one of Europe's worst-performing economies.
Following are facts about Ukraine's politics and finances and why the ex-Soviet state is vulnerable to heightened risk aversion among international investors.
POLITICS
* Ukraine has been plagued by political turbulence since Orange Revolution protests in 2004 brought to power President Viktor Yushchenko and a team committed to moving closer to the West and joining NATO and the European Union.
Rows pitting Yushchenko against his former ally Yulia Tymoshenko undermined the 'orange' camp and brought down governments, blocked policy-making and delayed a $16.4-billion IMF lifeline earlier this year.
* As the political mayhem escalated, Ukraine fell into a deep recession characterised by plunging steel exports and a much weakened currency which in turn destabilised the banking sector. The economy will shrink by up to 15 percent this year.
* Upheaval -- and trouble forming a stable ruling coalition -- reflect Ukraine's longstanding division into the nationalist west and centre, which looks to the EU and United States, and the Russian-speaking east and south, friendlier towards Moscow.
* Relations with Russia, bumpy throughout the post-Soviet period, have sunk to unprecedented lows. Yushchenko denounced Moscow's military intervention in Georgia last year, while his Russian counterpart Dmitry Medvedev called him anti-Russian.
* Ukraine depends heavily on Moscow for gas supplies and is a transit country for gas going to Europe. Disputes over gas prices between Moscow and Kiev have led to supply cuts to Europe, which receives 25 percent of its gas from Russia.
CURRENCY POLICY
* The hryvnia currency plummeted in the last four months of last year, losing over 60 percent of its value to the dollar as its exports sank.
* It has since strengthened to about 8.0 per dollar, from aN historic low of almost 10/$ in December and 4.5/$ last summer.
* Nevertheless its weakness has made it difficult for millions of Ukrainians to pay back debt which they took out in dollars. That has shaken the banking sector.
* The central bank, using its reserves and IMF funds, has been intervening on the foreign currency market on an almost daily basis since the start of the year to prop up the hryvnia.
FINANCES
* Ukraine has received over $10 billion from the IMF since last November. The loan came on condition of fiscal prudence, recapitalisation of banks and a liberal exchange rate mechanism.
* The IMF will decide whether to disburse a $3.8 billion tranche in the coming weeks. The government has failed to keep to some promises such as raising household gas prices.
* Foreign exchange reserves as of the end of September fell to $28 billion against almost $29 billion the previous month. The reserves amounted to $32 billion at the start of the year and were at record highs of almost $38 billion last summer.
* Analysts see the trade and current accounts becoming almost balanced by the end of the year because imports have dropped as domestic demand waned, while exports have become better priced because of the weakened hryvnia.
* The latest analysts' poll for Ukraine
FOREIGN DEBT
* The central bank said in September that Ukraine had about $1.9 billion in foreign debt to repay in total by the end of the year. The finance ministry says the government had just $400 million to repay to the end of the year.
* The central bank estimates Ukraine's foreign debt obligations in 2010 will be about $20 billion, $18 billion of which is commercial debt.
* The government has paid on time its Eurobond obligations -- a $500 million bond in August and a 768 million Swiss franc bond in September.
* But state energy firm Naftogaz -- often at the centre of energy rows with Russia and battered by higher gas prices -- was deemed in default of its $500 million Eurobond after it failed to repay it at the end of September.
* It wants to restructure its foreign debt by swapping it with a new $1.64 billion bond. The majority of investors appear to have agreed, though the deal is not yet done. Some analysts said the decision to restructure the debts was a political one as IMF funds could have helped Naftogaz repay its debt.
* Ukraine was forced to restructure its debts in 2000 and made the final payments just last year. Credit default swaps -- a tradeable instrument that measures risks of debt default -- have been the highest in the world for Ukraine.
(Compiled by Sabina Zawadzki)
((For main story, click on)) Keywords: UKRAINE ELECTION/FACTS (Kiev bureau; tel: +380 44 244 9150; RM: sabina.zawadzki.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Following are facts about Ukraine's politics and finances and why the ex-Soviet state is vulnerable to heightened risk aversion among international investors.
POLITICS
* Ukraine has been plagued by political turbulence since Orange Revolution protests in 2004 brought to power President Viktor Yushchenko and a team committed to moving closer to the West and joining NATO and the European Union.
Rows pitting Yushchenko against his former ally Yulia Tymoshenko undermined the 'orange' camp and brought down governments, blocked policy-making and delayed a $16.4-billion IMF lifeline earlier this year.
* As the political mayhem escalated, Ukraine fell into a deep recession characterised by plunging steel exports and a much weakened currency which in turn destabilised the banking sector. The economy will shrink by up to 15 percent this year.
* Upheaval -- and trouble forming a stable ruling coalition -- reflect Ukraine's longstanding division into the nationalist west and centre, which looks to the EU and United States, and the Russian-speaking east and south, friendlier towards Moscow.
* Relations with Russia, bumpy throughout the post-Soviet period, have sunk to unprecedented lows. Yushchenko denounced Moscow's military intervention in Georgia last year, while his Russian counterpart Dmitry Medvedev called him anti-Russian.
* Ukraine depends heavily on Moscow for gas supplies and is a transit country for gas going to Europe. Disputes over gas prices between Moscow and Kiev have led to supply cuts to Europe, which receives 25 percent of its gas from Russia.
CURRENCY POLICY
* The hryvnia currency plummeted in the last four months of last year, losing over 60 percent of its value to the dollar as its exports sank.
* It has since strengthened to about 8.0 per dollar, from aN historic low of almost 10/$ in December and 4.5/$ last summer.
* Nevertheless its weakness has made it difficult for millions of Ukrainians to pay back debt which they took out in dollars. That has shaken the banking sector.
* The central bank, using its reserves and IMF funds, has been intervening on the foreign currency market on an almost daily basis since the start of the year to prop up the hryvnia.
FINANCES
* Ukraine has received over $10 billion from the IMF since last November. The loan came on condition of fiscal prudence, recapitalisation of banks and a liberal exchange rate mechanism.
* The IMF will decide whether to disburse a $3.8 billion tranche in the coming weeks. The government has failed to keep to some promises such as raising household gas prices.
* Foreign exchange reserves as of the end of September fell to $28 billion against almost $29 billion the previous month. The reserves amounted to $32 billion at the start of the year and were at record highs of almost $38 billion last summer.
* Analysts see the trade and current accounts becoming almost balanced by the end of the year because imports have dropped as domestic demand waned, while exports have become better priced because of the weakened hryvnia.
* The latest analysts' poll for Ukraine
FOREIGN DEBT
* The central bank said in September that Ukraine had about $1.9 billion in foreign debt to repay in total by the end of the year. The finance ministry says the government had just $400 million to repay to the end of the year.
* The central bank estimates Ukraine's foreign debt obligations in 2010 will be about $20 billion, $18 billion of which is commercial debt.
* The government has paid on time its Eurobond obligations -- a $500 million bond in August and a 768 million Swiss franc bond in September.
* But state energy firm Naftogaz -- often at the centre of energy rows with Russia and battered by higher gas prices -- was deemed in default of its $500 million Eurobond after it failed to repay it at the end of September.
* It wants to restructure its foreign debt by swapping it with a new $1.64 billion bond. The majority of investors appear to have agreed, though the deal is not yet done. Some analysts said the decision to restructure the debts was a political one as IMF funds could have helped Naftogaz repay its debt.
* Ukraine was forced to restructure its debts in 2000 and made the final payments just last year. Credit default swaps -- a tradeable instrument that measures risks of debt default -- have been the highest in the world for Ukraine.
(Compiled by Sabina Zawadzki)
((For main story, click on)) Keywords: UKRAINE ELECTION/FACTS (Kiev bureau; tel: +380 44 244 9150; RM: sabina.zawadzki.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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