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Continuing protests, lack of compromise weaken Ukraine’s economy - acting PM

February 06, 2014, 1:16 UTC+3 KIEV
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KIEV, February 06,  /ITAR-TASS/. Political instability in Ukraine, where anti-government protests have been ongoing since last year, is the key reason for the weakening of the country’s national currency, hryvnia, and the drop in the country’s rating, acting Ukrainian Prime Minister Sergei Arbuzov said at a government meeting.

“Each extra day of confrontation and unwillingness to make a compromise weakens our state, first and foremost, economically,” Arbuzov, appointed as acting premier by President Viktor Yanukovich on Thursday, said.

“International ratings agencies have downgraded our country’s ratings due to political instability,” he said Thursday. “Although in early January they planned to change the ratings’ outlook to positive.”

Arbuzov said the executive power in Ukrainian regions cannot work as usual as not all administrative buildings have been vacated by protesters.

He also complained that there was a "tension despite a lack of economic reasons for that," adding that Ukraine had a positive balance of payments in 2013.

Ongoing protests that started when Ukraine’s authorities refused to sign an association agreement with the European Union at a summit in Vilnius in November 2013 and opted for closer ties with Russia instead, have often turned into violent clashes with police.

The country’s leadership adopted tougher laws for public order violations in mid-January, which triggered another wave of protests, but later repealed the laws.

Prime Minister Nikolai Azarov, in office since March 2010, resigned on January 28, and the Ukrainian authorities also decided to pardon participants of riots on condition protesters vacate state and local power institutions they seized within 15 days. Opposition leaders reacted defiantly and with skepticism to the amnesty law that entered into force February 2.

Moody's Investors Service said January 31 it had downgraded Ukraine's government bond rating to Caa2 from Caa1, and assigned a negative outlook on the rating. On January 28, the Standard & Poor’s ratings agency lowered its long- and short-term foreign currency sovereign credit ratings on Ukraine to “CCC+/C” from “B-/B”, with a negative outlook.

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