The forthcoming presidential election will not change the political situation in Ukraine dramatically, says Mikhail Dmitriyev, director of the Center for Ukrainian and Belarusian studies.
He says the turbulent times rooted in the Orange Revolution of 2004 are now over.
“Ukraine will enter a new phase of its political life – and this new phase will be much more stable and will bring us far less surprises,” he told RT.
Political analysts he predicts there will be a second round to the election. Although it is Viktor Yanukovich who has the best chance in the first round, analysts did not rule out the victory of incumbent Prime Minister Yulia Timoshenko.
Following are key facts, presented by Reuters, about Ukraine's politics and finances and why the ex-Soviet state is especially vulnerable to heightened risk aversion among international investors.
POLITICS
* Ukraine has been plagued by political turbulence since "Orange Revolution" protests in 2004 brought to power President Viktor Yushchenko and a team committed to moving closer to the West and joining NATO and the European Union.
Rows pitting Yushchenko against his former ally Yulia Tymoshenko split the "orange" camp and brought down governments, blocked policy-making and delayed a $16.4 billion IMF lifeline earlier this year.
* Ukraine fell into a deep recession marked by plunging steel exports and a much weakened currency which in turn destabilised the banking sector. The economy contracted by up to 15 percent in 2009.
* Ukraine's fractious political life reflects the country's longstanding division into the nationalist west and centre, which looks to the EU and United States, and the Russian-speaking east and south, which are friendlier towards Moscow.
* Relations with Russia, bumpy throughout the post-Soviet period, have sunk to unprecedented lows under Yushchenko. The Ukrainian president denounced Moscow's military intervention in Georgia in 2008, while his Russian counterpart Dmitry Medvedev called him anti-Russian.
* Ukraine depends heavily on Moscow for gas supplies and is a transit country for gas going to Europe. Disputes over gas prices between Moscow and Kiev have led to supply cuts to Europe, which receives 25 percent of its gas from Russia.
CURRENCY POLICY
* The hryvnia currency plummeted in late 2008 as the economic crisis took hold, losing over 60 percent of its value to the dollar as its exports sank.
* It has since strengthened to about 8.0 per dollar, from a historic low of almost 10/$ in December 2008 and compared to that year's peak of 4.5/$.
* Its weakness has made it difficult for millions of Ukrainians to pay back debt which they took out in dollars. That in turn has shaken the banking sector.
* The central bank, using its reserves and IMF funds, has intervened on the foreign currency market on an almost daily basis since the start of the crisis to prop up the hryvnia.
FINANCES
* Ukraine has received over $10 billion from the IMF since November 2008. The loan came on condition of fiscal prudence, recapitalisation of banks and a liberal exchange rate mechanism.
* The Fund suspended its programme and refused to disburse a $3.8 billion tranche after parliament and the President raised the minimum wage contrary to the government's wishes, costing the budget potentially billions.
* IMF chief Dominique Strauss-Kahn said the fund would
resume work only after the presidential election.
* But in a surprise move, the IMF did allow the central bank to spend $2 billion of its foreign currency reserves -- effectively answering Ukraine's demands made in December for an emergency loan of similar proportions.
* Foreign exchange reserves as of the end of November dipped to $27 billion. The reserves amounted to $32 billion at the start of 2009 and were at record highs of almost $38 billion in the summer months of 2008.
* Analysts estimate the trade and current accounts as close
to balanced in 2009 as imports dropped because domestic demand
waned and exports become better priced because of the weakened
hryvnia.
FOREIGN DEBT
* The central bank estimates Ukraine's foreign debt
obligations in 2010 will be about $20 billion, $18 billion of
which is commercial debt.
* The government said it had paid all its domestic and
foreign debt due in 2009 on time and in full, despite investors'
fears throughout the year of some sort of default.
* It has however restructured a so-called quasi-sovereign
bond of state energy firm Naftogaz by swapping its foreign debt
for a new issue worth $1.6 billion.
* It is also in the process of changing the terms of another
quasi-sovereign bond of its state railway company, news of which
sent jitters round European markets.
* Ukraine was forced to restructure its debts in 2000 and made the final payments only in 2008. Credit default swaps -- a tradable instrument that measures risks of debt default -- have been the highest in the world for Ukraine.
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