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."