By Natalia Zinets and Jack Stubbs
KIEV Feb 5 The confrontation between
opposition-led protesters and the government of President Viktor
Yanukovich, and a refusal to agree a compromise, is weighing on
the Ukrainian economy, acting prime minister Serhiy Arbuzov said
"Political instability is putting pressure on the currency
market. There is tension despite a lack of economic reasons for
this," he told a meeting of the interim cabinet.
"Every day of confrontation and a lack of desire to find a
compromise weakens our country economically," said Arbuzov, who
was appointed after the resignation of Prime Minister Mykola
Azarov last week as Yanukovich tried to appease protesters.
Weeks of standoff with the opposition show no sign of
easing. But, Arbuzov said: "There are no fundamental economic
reasons for concern."
He noted the balance of payments for 2013, published on
Tuesday, showed a surplus of $2.021 billion compared to a 2012
deficit of $4.175 billion.
However, the overall current account deficit grew last year
by 13 percent to $16.141 billion. The data showed the balance of
payments recorded a $3.288 billion surplus in December, the
month when Russia bought $3 billion of two-year Eurobonds from
Ukraine as the first tranche of a financial support package.
Ukraine's central bank intervened in the currency market for
a second day on Wednesday, offering to sell dollars at auction
for 8.7000 hryvnias against 8.6000 hryvnias on Tuesday. The
hryvnia was quoted on the commercial market at 8.75-8.80 per
dollar, little changed on Tuesday's close of 8.75.
Tuesday's intervention was the first since last Thursday.
The bank has been trying to stem strong demand for dollars
prompted by the unrest, which has seen demonstrators take over
the centre of Kiev and public buildings in other cities since
November. The protests were prompted by Yanukovich's rejection
of a trade deal with the European Union and decision to accept
the financial aid from Russia instead.
The hryvnia has lost more than 6 percent so far this year.
Analysts link the currency's recent slide to uncertainty
over the $15-billion Russian aid package which saved the country
from default in December. Moscow has suspended a second tranche
of aid until it is clear who will take over as premier from
Azarov, who favoured ties with Russia. [ID: nL5N0L51FV]
Speculation that Western powers might provide alternative
financial support have helped rally Ukraine's dollar bonds this
week. EU and U.S. officials say they are looking at helping a
new Ukrainian government.
EU foreign policy chief Catherine Ashton was meeting
Yanukovich and opposition leaders on Wednesday in Kiev to
discuss a peaceful solution to the country's political crisis.
Asked about when Yanukovich might name a prime minister, the
parliamentary leader of his Party of the Regions told a news
conference that the president had 60 days from the moment of
Azarov's resignation to name a new premier.
"Today, consultations are going on and it seems to me that
it's possible that the president will give his opinion next
week," Oleksandr Yefremov told a news conference.
He was also asked about comments from a fellow lawmaker that
Yanukovich was considering an early parliamentary election to
try and break deadlock with the opposition.
"I don't the president has a great desire to plunge the
country into elections," Yefremov said. "But if things go on as
they are, when parliament is not working, then something will
have to be done."
A recent opinion poll showed the Party of the Regions would
be the biggest party in an election, with 20.7 percent of the