Turkey, Ukraine Most Exposed in Crisis Repeat, Goldman Says
Bloomberg Friday, August 26, 2011
(Updates with comment from third paragraph, Hungary in sixth, Israel in eighth, South Africa in ninth.)
Aug. 26 (Bloomberg) -- Turkey and Ukraine are more vulnerable to a repeat of the 2008 financial crisis than other nations in central and eastern Europe, the Middle East and Africa, Goldman Sachs Group Inc. said.
Turkey has "accumulated substantial external imbalances" and an International Monetary Fund program has been sidelined in Ukraine, economists including Clemens Grafe and Ahmet Akarli said in an e-mailed report today. Russia would also be exposed, though "a more resilient banking system and increased ruble flexibility" should limit the impact, they said.
"Our analysis suggests there are marked financing risks in a number of CEEMEA economies should we see a repeat of 'crisis- like' stress conditions," Goldman said. "The 'stress-case' scenario implies that Turkey and Ukraine may be relatively more vulnerable to potential balance of payments incidents."
Turkey's current account deficit, which widened to a record $72.5 billion in the 12 months through June, or about 9 percent of economic output, has brought losses for the lira of 13 percent this year, the biggest decline among more than 20 emerging markets tracked by Bloomberg. Meanwhile, in Ukraine, the IMF has delayed a visit planned for next week until October, pending a revamp of its pension system and steps to narrow the budget deficit.
In the event of external financial stress, the adjustment to correct Turkey's current account deficit "would have to be much more abrupt, leading to significant output losses, further lira weakness and possibly a fall in foreign exchange reserve levels," Goldman said.
In Hungary, five-year credit default swaps, which measure the cost of insuring a country's debt against default, have surged to the highest since April 2009, partly on concern that disagreements with the IMF leave the country more exposed to a financial shock.
"The breakdown in negotiations with the IMF means that the government will need to convince the markets of the credibility of its reforms and fiscal commitments; an unconvincing performance would increase the likelihood that the country would have to undergo another painful adjustment," Goldman said.
The external balances of Israel and Kazakhstan look more resilient, the report said.
In South Africa, "the required current account adjustment is to a large extent generated by the existing moderate current account deficit," Goldman said. "In addition, we would expect to see a relative outperformance of gold under a 'back to 2008' scenario."
--Editors: Alan Purkiss, Chris Peterson
Out and Out Ukrainian government LIE !!!!!
Info is that the IMF has no plans to come to Ukraine , and that the commitment --a "maybe" for October/November was all that Yaroshenko (Finance) and Bojko (Energy) could get. Tihipko did not even go to Washington, as he knows how hopeless it was...wd
Ukrainian PM Sees No Obstacle to Getting Another IMF Tranche
Friday, August 26, 2011
Ukrainian PM sees no obstacle to getting another IMF tranche
KYIV. Aug 26 (Interfax) - There is no reason why Ukraine cannot get another tranche from the International Monetary Fund, Ukrainian Prime Minister Mykola Azarov said.
"I am saying once again: We do not need money now. If we need it, this means we will go to Washington, set certain conditions, look at the conditions required from us by the creditors, and get this tranche," he told journalists on Friday.
"There are no obstacles to getting the tranche," Azarov said.
The cooperation between Ukraine and the IMF has been not just active, but also growing, he said.
The fact that the IMF mission has postponed its visit to Ukraine is the result of talks between Ukraine and the IMF, he said.
"The statement made by the IMF yesterday says that the cooperation does not just continue, but is actively developing. The real situation is that our finance minister, our minister of fuel and energy and the head of the National Bank held talks with the IMF management and agreed to determine how the program is being implemented and slated the dates for the mission's arrival," Azarov said.
Ukraine does not need IMF money - premier
Friday, August 26, 2011
Kiev, 26 August: There are no obstacles to Ukraine's receiving the next tranche of the IMF loan, Prime Minister Mykola Azarov has said.
"I am telling you again: we do not need the money now. If we need it, we will go to Washington, set certain conditions, (agree) the fulfilment of conditions set by our creditors and get the tranche. There are no obstacles to receiving the tranche (from the IMF - Interfax-Ukraine)," Azarov said to journalists today.
(The IMF's mission was to arrive in Kiev on 29 August to discuss the transfer of a new trache. The visit has been postponed until November. The Kommersant-Ukraina business daily reported on 26 August, quoting a Ukrainian official source "close to the talks with the IMF", that the decision to defer the visit was a move supported by both Ukrainian and IMF officials.)
(Description of Source: Kiev Interfax-Ukraine in Russian -- Service provided by the Russian news agency Interfax focusing on events in Ukraine)