KIEV, Ukraine -- The Ukrainian government, facing a deadlock with the International Monetary Fund over resumption of its $15.5 billion loan program, has hired a U.S. lobbyist firm to try to get the money, a newspaper reported Wednesday.
The Washington-based firm, APCO Worldwide, on March 2 circulated a letter among its senior advisors around the globe, including former diplomats and elected officials, seeking assistance in dealing with the IMF.
The letter, apparently sent by Brent Crane, Program Manager at APCO Worldwide, was aimed at helping Ukraine to get around the key IMF demand of hiking natural gas prices for households, something the government has been refusing to do.
“We are looking for persons with strong ties to relevant IMF personnel who could be in the position of querying those personnel about whether there are opportunities for creativity here to avoid the gas price hikes, which still could achieve IMF objectives,” said the letter, which was obtained and published by Ukrayinska Pravda online newspaper.
“We would take that information and discuss it with the government of Ukraine, and try to build bridges between the IMF and Ukraine with the goal of moving beyond what is now a year-long impasse,” the letter said.
The government has earlier hired U.S. law firms to check whether the previous government, led by then Prime Minister Yulia Tymoshenko, misspent any state money.
But the hiring of APCO comes after many government officials, including Prime Minister Mykola Azarov, have repeatedly said that Ukraine would be able to handle its foreign debts payments even without the IMF money.
The letter, called the ‘Urgent Request,’ mentions that “Finance Minister Valeriy Khoroshkovskiy has been seeking to find ‘compromise’ with the IMF,” but those talks failed.
Khoroshkovskiy was appointed the finance minister on January 18, but was on February 22 dismissed as the finance minister and moved to the position of the first deputy prime minister by President Viktor Yanukovych.
Yuriy Kolobov, who replaced Khoroshkovskiy as the finance minister, is supposed to visit Washington later this month for talks with the IMF, Azarov reported Tuesday.
Kolobov, who is believed to be a close ally of Oleksandr Yanukovych, the son of the president, is expected to meet Chris Jarvis, the recently appointed IMF’s new mission chief for Ukraine.
The $15.5 billion loan was frozen in early 2011 after the government had failed to increase by 50% natural gas prices for households and utility tariffs to balance the budget.
Ukraine may ask the IMF to resume the lending that would automatically go towards repaying its debts to the Washington-based lender, Azarov has suggested earlier this week.
Ukraine needs to repay about $3.2 billion to the IMF by the end of the year, and has been struggling with raising enough funds from capital markets.
The government paid $575 million to the IMF in February.
Serhiy Tyhypko, deputy prime minister in charge of social issues and one of the key negotiators with the IMF, on Wednesday admitted the talks were at impasse.
“I don’t know about the American lobbyists, but it is the fact that we have reached an impasse,” Tyhypko said at a press conference.
He said the only reason for suspended lending is the government’s refusal to hike gas prices for households, but said the government will not resort to hiking the prices this year.
“We are not going to do this,” he said.
In the letter, requesting assistance, APCO said the government believes raising the gas prices now would be “politically suicidal” for the governing Regions Party ahead of October 2012 elections.
APCO Worldwide was founded in 1984 and is an independently owned global communication consultancy with offices in major cities throughout the Americas, Europe, the Middle East, and Asia.
Its clients include corporations and governments; industry associations and nonprofit organizations; and seven of the top 10 companies on Fortune’s Global 500.