Former Finance Minister and MP Mykola Azarov of the Party of Regions scolds the Finance Ministry for plans to raise in the near future expensive foreign loans through an issue of eurobonds to the amount of over USD 500 million.
Ukrainian News learned this from a statement by the press service of the Party of Regions.
"In May 2008, the Cabinet of Ministers of Ukraine passed a decision to place on foreign markets Ukrainian eurobonds. Generally, it would be a routine decision for a stable economic situation, but this year it has a very negative context," the press service quoted Azarov as saying.
According to Azarov, last week the spread on Ukrainian foreign loans grew by 54 base points to 448 base points. The growth was twice as fast as the growth in the index for all developing markets of 28 base points.
"Thus, the world financial markets showed distrust in the policies of the current government in significantly increasing the price for risks of investment of capitals in Ukraine," the statement reads.
In the circumstances concerned, according to Azarov, the foreign funds will be raised by the government at 8% or higher with an issue of ten-year securities and at least 7.6% with an issue of five-year securities, whereas Ukraine placed eurobonds at 6.39% in 2007, and at 6.58% in 2006.
"Thus, the government of [Prime Minister Yulia] Tymoshenko is going to conduct the most expensive borrowing over the past years," Azarov said.
He also criticizes the government for the plan to raise foreign loans, while the government has around UAH 23.2 billion on its Single Account at the Treasury.
Azarov also says the goals of the raising of foreign loans lack transparency.
"The announced appearance of Ukraine on the international market of capital puts two questions: firstly, which secret goals the government wants to achieve with the money to be raised; secondly; whether or not the government is proper and the state is predictable if they are striving to put their necks in the noose in taking borrowings at the worst conditions," the statement reads.
As Ukrainian News earlier reported, the Cabinet of Ministers on May 14 regulated the raising of foreign loans in 2008.
The Finance Ministry late in June conducted a road show of government eurobonds, which will be issued to the amount of over USD 500 million.
Managers of the issue are BNP Paribas, France; JP Morgan, the United States; and Standard Bank, Britain.
