Ukraine Flap Leads to IMF Concerns
Wednesday, 15 March 2000
W A S H I N G T O N (AP)
THE INTERNATIONAL Monetary Fund faced new calls for reform on
Wednesday following its announcement that Ukraine, a top recipient of
IMF loans, had given the agency false reports concerning the state of the
country's finances.
Edwin M. Truman, assistant Treasury secretary for international affairs,
said the Clinton administration wanted investigations into the matter to
continue while a leading congressional critic said the new revelations would
spur his effort to enact reform legislation in Congress.
The IMF reported late Tuesday night that Ukraine's central bank had
engaged in a number of transactions worth almost $1 billion to generate a
falsely optimistic picture of its foreign currency reserves between 1996 and
1998.
Relying on that information, the IMF said it had approved three loans to
Ukraine in late 1997 and early 1998 that it would have decided against "if
the true state of Ukraine's reserves had been known at the time."
Truman said in a statement Wednesday that the United States was "deeply
concerned" by the IMF revelations and said the agency should proceed
quickly with an investigation to determine what changes are needed in its
loan practices.
"We will review the results of this investigation in order to determine what
additional controls are needed to prevent future inappropriate reserve
management practices and to ensure that future IMF resources made
available to Ukraine are used for their intended purposes," Truman said.
The new revelations come at a time when the 182-nation lending agency is
coming under heavy criticism. An 11-member advisory panel appointed by
Congress released a report last week calling for a major overhaul of how
the IMF and its sister lending institution, the World Bank, operate.
Rep. Jim Saxton, R-N.J., called the new allegations "very disturbing" and
said they would be examined by Congress in upcoming hearings.
"Once again an IMF borrower has supplied false or misleading information
to the IMF and to date has suffered no visible negative consequences,"
Saxton said. "The IMF's traditional `see no evil, hear no evil' approach to
corruption has got to change."
Saxton is sponsoring legislation which would link future U.S. support to the
IMF to an agreement by the agency to halt loan operations for five years to
any country found supplying the agency with false information.
The handling of the Ukraine investigation was similar to the IMF's response
to allegations last year concerning Russia, Saxton said.
"The IMF's admission last summer that it had been lied to by the Russian
central bank at the same time a new loan was approved (by the IMF) does
not show strong IMF concern about public integrity standards in
borrowing countries," Saxton said.
Ukraine has been a regular borrower from the IMF since the Soviet Union
broke up in 1991. It has received loans totaling nearly $6 billion since
1995. The IMF has put pending loans of $2.5 billion on hold pending
negotiations with the country over the adoption of economic reforms |
