News
02.02.2010
Ukraine farm loan plans branded 'science fiction'
The promise by Ukraine's prime minister to create a bank offering low-interest loans to farmers may turn out to be "science fuction", UkrAgroConsult has said in a report adding 1m tonnes to its grains forecast.
Yulia Tymoshenko, who is contesting this weekend's run-off for Ukraine's presidential elections, on Sunday restated her plans to create an agricultural bank, which would provide farm loans for potentially a decade at interest rates of at most 5%.
"In 2010, we want to create the state-run agrarian bank," Ms Tymoshenko said.
However, Ukraine's economic ills, which have forced it to turn to the IMF for help and left its national accounts on the verge of bankruptcy, raise "serious doubts" about the plans, UkrAgroConsult said.
"Creating the bank is the easy bit, but handing out loans to Ukraine's agricultural class at 5% annual interest is doubtful, extremely doubtful or just plain old science fiction," the influential analysis group said.
"Particularly as the promise is to grant loans for 7-10 years without collateral. The Ukrainian budget is unlikely to shoulder such an additional burden in the current economic situation."
Overoptimistic promises?
Agriculture, a key earner of foreign currency and investment, has been a key battleground of the elections, in which the pro-European Ms Tymoshenko faces Viktor Yanukovich, who is viewed as more Russia leaning.
However, the winner of the February 7 vote is widely seen as likely to need to implement huge cuts to Ukraine's public spending, whose levels last year prompted the IMF to suspend its support programme.
"Having learnt to live in a democracy, [we] have also learnt to believe little of what's promised during election campaigns," UkrAgroConsult, which is based in Kiev, said.
"To implement all the promises would probably require more dollars than China has in its hard currency reserves."
Weak crops
UkrAgroConsult's comments came as it forecast Ukraine's grain production this year at 43.95m tonnes, down 3.2%.
Spring plantings of cereal crops would be "somewhat larger than last year at the expense of increased corn areas", the group said.
However, winter crops were "in their worst condition in the past four years", after dry autumn planting conditions.
"Spring fertilization of crops will be critical."
Agrimoney
