INTERNATIONAL COOPERATION OF UKRAINE IN THE FIELD OF FINANCE.

Yaniv I.

Kovalyuk J.

Chernivtsi

Bukovina State Finance Academy

The article deals with the essence of the concept of international financial institutions, the main task of MFIs and their impact on economic development of the state.

Introduction. Emphasis is made that economic development of a country can reach rapid growth which may require the use of domestic and international investment funds with balanced ratio of foreign and domestic investment.

Given the fact that Ukraine's economy has been in transition development over the past 15 years with needs of financial support is extremely critical and urgent problem. Indeed, on the one hand, there is urgent need for large-scale financial investment and on the other hand to find the optimal conditions for their implementation and debt.

Activities of international financial organizations shall be increasingly important for Ukraine. It promotes economic transition to market relations, stability and economic progress. Ukraine participates in major international monetary and credit and financial institutions (IMF, World Bank, EBRD). Ukraine's cooperation with these organizations is important source of funds for the national economy.

The purpose of the article is investigation of the role of international relations of Ukraine in the field of finance and their impact on the economy of the country.

Analysis of recent research and publications is investigation of the role of international financial institutions in the international economic relations with the globalization process, the evolution of cooperation and credit relations of the International Monetary Fund (IMF) with Ukraine were dedicated in work of national economists: N. Bidnyk [1], G. Verbytska [2], N. Zayarna [3], T. Chernychko [4], A. Solodovnik [5] and others.

The main part. International financial institutions are becoming increasingly important in international economic relations, because through them a significant share of world investments and sale of currency to finance exports and imports are made. These organizations are especially important activities for countries in transition to market relations and are ready to be used as administrative experience of MFIs and local capacity.

Ukraine’s needs to support international financial institutions are triggered: firstly, Ukraine has yet virtually no real access to international financial markets. External financing can mostly be received from official sources. And the main official source is the IMF. Even possible one-sided funding from countries such as the USA, Japan, can usually be arranged through agreements with the Fund. Secondly, the policy of the Fund, which is held in Ukraine and related to its financial support, is aimed at stabilizing the socio-economic situation in Ukraine. Loans that are attracted from the IMF are used to support the national currency and to finance the deficits of Ukraine and ameliorate the economic hardship in the framework of economic reforms to future growth in the country. Financial support from official sources without the economic reformations does not have sense because funds will use to finance only the problems, current balance of payment which will increase again into additional burden without reforming economy.Largely thanks to the cooperation with the IMF, our country managed to attract significant World Bank loans.

However, in absolute terms the contribution of international organizations in the Ukrainian economy is impressive. Especially Ukraine cooperates closely with the IMF. Today Ukraine is financially dependent on the IMF.

The World Bank is more active in support of Ukraine. Ukraine became a member of the World Bank in 1992. In Bank 1992 approved loans for Ukraine, amounting to about $ 5 billion on 36 projects and programs – out of that amount today Ukraine has already received about 3,9 billion dollars.

Chart 1.

Major projects IFO in Ukraine .

Organization	Year of approval loan	The purpose of credit	Loan amount $ million
World Bank	1996, 1998	Private Sector Development Program (in two parts)	610
	1997	Reforms of 1997-98	542
	1994	Rehabilitation loans for economic development	500
	1996	Development of agriculture	300
	1996	Development of Coal Industry	300
	1998	Financial Sector Development	300
	2001	Program loan to finance the budget deficit	250
	2003	Second Programmatic Adjustment Loan to finance the budget deficit	250
IMF	1995	Financing the budget deficit and balance of payments	1800
	1996	Economic reforms (lowering inflation, rate stabilization, restructuring of energy sector), financing the deficit budget	867
	1999	Funding deficits	184
	2005	Construction of Kyiv-Chop	125
	2006	Credit by Mittal Steel to modernize production Kryvorizhstal	200
	2008, 2010	Credit Line «stand by», necessary to maintain the stability of credit and financial system of Ukraine (three tranches)	16400
IFC	2004, 2005	Expansion of production facilities "MHP"	110
	2006	Credit Corporation, " the Industrial Union of Donbass "	100

Analyzing this chart, we can conclude that within ten years Ukraine was given a lot of money to support its further development. It is alleged that as of May 2010 Ukraine is the third largest IMF borrower, following Hungary (11,6 billion) and Romania ($ 12,5 billion). IMF provided 16.4 billion loan in October 2008 for Ukraine, of which the government had not received $ 10.6 billion. Further payments were frozen in late 2009, after Ukraine had raised minimum wages and pensions contrary to the IMF.

Quite significant is the assistance to Ukraine from the European Union (EU), which comes within the framework of TACIS (EU program witch provides technical assistance to newly independent states that emerged after the collapse of the USSR).

It is noteworthy that in the process of cooperation between Ukraine and international financial institutions problems have related to specific economic development and financial organizations. That is we often receive financial assistance through the enforcement of certain political concessions.

Conclusions. International financial institutions are important for improving the economic situation in Ukraine. Cooperation Ukraine with IFO indicators helps improve financial stability, a competitive market environment, stabilizing the national currency, activation of the investment process, development of private enterprise.

The main areas of optimization of relations between Ukraine and financial organizations are:

- Ukraine's integration into international economic and political relations through closer cooperation with the International Monetary Fund;

- Current status of the national economy of Ukraine should be taken into account in the strategic planning process relations with international financial organizations;

- Provide advice and political support from international organizations for this stage is more beneficial than just financial assistance;

- Cooperation with international financial organizations and Ukraine should be based on achieving national interests at home and abroad;

- Overall structural reforms.

Bibliography:

1. Bidnyk N. Ukraine's cooperation with international financial institutions, economic growth factor /N. Bidnyk //Scientific Bulletin NLTU Ukraine. - 2009. - Vol. 19.3. P. 153-157.

2. Verbytska G. International debt problems in global financial markets /G. Verbytska // Bulletin TNEU - 2009. - № 3. P.77-84

3. Zayarna N. International financial institutions and their role in transforming the economy of Ukraine /N. Zayarna // Scientific Bulletin. - 2007. - № 17.4. P. 184-189.

4. Chernychko T. Financial and credit relations in the economic relations / T. Chernychko // Scientific Bulletin NLTU Ukraine. - 2010. - Vol. 20.11. P. 263-267.

5. Solodovnik O. The problems of exchange controls Ukraine's foreign trade / O. Solodovnik// Economy. - 2009. - № 21. P. 35-41.

6. Official website of State Statistics Committee of Ukraine - http://www.ukrstat.gov.ua.