14/03/2014 World Business Report

BBC World News. Now for the latest financial news with World Business

Report. While Ukraine promises to adopt

measures needed to steady an economy beset by a plunging currency and

widening budget deficits, the IMF begins negotiations to develop an

economic reform programme. Facebook's CEO, Mark Zuckerberg,

complains to President Obama over allegations of damage caused by the

U.S. Government's surveillance programmes.

Welcome to World Business Report. In a minute we'll be looking at why the

Asian markets have dropped to a one month low. But first: 'The new

Ukrainian government is ready to deliver changes'. Those were the

words of the Ukrainian Prime Minister as he sought financial aid

from Western donors in Washington this week, including President

Barack Obama and Christine Lagarde, managing director of the

International Monetary Fund. Arseniy Yatsenyuk promised he'd adopt

measures needed to steady an economy beset by a plunging currency and

widening budget deficits. But it could all take quite some time.

Economists say the problems run deep in Ukraine, a country still dealing

with the legacy of its Soviet past ,as it tries to embrace trade

opportunities beyond Russia. Ukrainian officials say the country

is nearing bankruptcy. Christine Lagarde says the IMF team that went

on a mission to Ukraine to gather data about the government's finances

on March fourth and was expected to conclude today, will now remain

until March 21st. They're expected to call for reforms as a condition

of any long-term aid. President Barack Obama's promised $1 billion

in loan guarantees to Ukraine is not expected to be approved by Congress

for some time, while House Republicans are pushing their own

aid bill that includes no Russia sanctions or IMF provisions. So,

let's look at this internal wrangling and the delays. How much

money could Ukraine need and what strings will be attached to any

IMF-led bailout? In a moment we'll speak to a regional economy expert

but here's what the IMF said earlier. Under the reform, Ukraine's

quota would increase so that, potentially, its access to IMF

resources would also increase, other things being equal. I want to add to

that the caveat that quotas are just one relevant metric in terms of

overall potential financing packages. It is contingent on a

number of other considerations - balance of trade, finances. IMF

support is widely seen as critical to Kiev's finances and to getting

its economy on a growth track.With me is Lilit Gevorgyan, Senior

Economist at IHS Global Insight. Would you describe the Ukrainian

economy as near bankruptcy? Their international currency reserves are

running low. They have only two months import coverage which is

already a worrying sign. The government itself has admitted that

they desperately need to save the economy from the abyss. They need

$35 billion to be able to save the economy. If they did not get this

assistance, they have a current account deficit, a budget deficit,

both are very high and they do not have any other means of raising

capital on international markets. I can sense you about to say but. Is

an IMF bailout the answer? What strings would be attached to such a

bailout and would that be good for Ukraine in the long run? It will be

good in the long run but not in the short term, in the sense that it

will create much more difficult situation for households. Private

consumption has been the driving force of GDP growth for many

quarters now. The IMF austerity measures will actually hope this

private consumption. That means that if the IMF introduces austerity

measures with the help of the government, this would include an

increase of the domestic gas price. The currency will continue to

weaken, which would make imports more expensive, hence eroding

household disposable income. These are issues that put further

instability in the country. It is already struggling, and has already

serious issues in eastern Ukraine. This is a fractious coalition

government which has yet to gain control over the whole country. If

you mix this economic solution with the political situation, you can see

that it is quite dangerous in terms of the political situation. I do

think that, in the short term, it may create some problems but in the

long-term it will rebalance the Ukrainian economy which is

necessary. Short-term pain for long-term gain. Thank you.

The founder of Facebook, Mark Zuckerberg, has accused the US

government of damaging the future of the internet. He said the government

should be a champion of the web, not a threat and said he had called

President Obama to appeal for more transparency. Secret documents

published earlier suggest that the US National Security Agency had

impersonated Facebook web pages in order to tap into computers and

gather information. From New York here's Samira Hussain to explain the

background. The US government surveillance

practices are part of a big public debate here in the United States in

terms of how much the government is looking into people 's information.

That debate is quite pronounced in Silicon Valley. The companies they

feel that the reach of the US government is actually eroding their

relationship with consumers and companies. The open letter that we

are seeing from Mark Zuckerberg, founder of Facebook, is a reaction

to reports that have just been released suggesting that the

national security agency, America's spy agency, has been installing

malware onto certain computers. They then have access to individual hard

drives. It turns out that the way to get people to install the programme,

in some instances, the use a masked Facebook site to be able to

accomplish that. When those reports have emerged, at UC Mark Zuckerberg

calling President Obama and revealing that conversation in an

open letter. He highlights how important it is to maintain privacy

and this is really a big debate that is happening here. That said, it

comes at a time when people are discussing privacy in terms of

social media. Let's turn to the markets. Asian

shares have dropped to a one-month low as the Ukraine crisis has had an

impact across the globe. Sharanjit Leyl joins me from Singapore.

You see the indicator down over 3%. Losses in Hong Kong and Australia as

well. The yen is rising against the US dollar. That means a sell-off in

shares in Tokyo. You mention tensions in Ukraine. This is ahead

of the weekend 's referendum in Crimea. Investors are avoiding

riskier assets and trillions of dollars have been wiped off global

markets. This uncertainty has meant a flight to safe havens like he

began. Gold has risen to a six-month high. -- the yen. There are also

concerns about China's economy faltering.

Let's have a quick look at the numbers.

I will be back for a look at the papers in just a moment.

Little bit more news from the UK. Severely ill patients could be given

new medicines years before they are licensed under new regulations. The

Early Access to