IMF releases $1 bln loan for cash-strapped Ukraine

KYIV - Agence France-Presse

The International Monetary Fund has decided to release the next $1 billion loan payment to Ukraine, which had been postponed following the blockade imposed on the separatist east of the country, the Ukrainian president said on April 3.

“The IMF board took the decision to grant Ukraine one billion dollars,” Petro Poroshenko wrote on his Facebook page, seeing it as “another sign of the reforms under way in Ukraine.”
  
Cash-starved Ukraine has been desperately waiting for the next instalment of a $17.5-billion rescue program that has been held up repeatedly since it was agreed in 2015 over delays by Kyiv to carry out reforms.  
  
The announcement brought total funds disbursed under the arrangement so far to about $8.4 billion.

The IMF had delayed its decision on the next loan instalment, originally scheduled for March 20, saying it needed to reassess the “implications of recent developments for the program.”

The postponement came after Kyiv’s pro-Western leadership in March imposed a trade blockade on Russian-backed rebel-held eastern regions. Kiev took the drastic step after rebels seized dozens of Ukrainian-owned businesses on their territory in response to a trade blockade by nationalist protesters.

The IMF program is intended to help stabilize the country after the 2014 ouster of pro-Russian President Viktor Yanukovych.     

The head of Ukraine’s Independent Association of Banks in Ukraine Roman Shpek has said that nearly all the money would go into refinancing the former Soviet republic’s outstanding debt to the IMF.

David Lipton, acting chair of the IMF’s board and first deputy managing director, praised what he said had been “decisive” action by Kyiv on economic policy, adding that the country was showing welcome signs of recovery.

However, Lipton said Ukraine still needed to speed up structural reforms -- such as privatization and creating a market for farmland -- to attract investment.

“Corruption needs to be tackled decisively. Despite the creation of new anticorruption institutions, concrete results have yet to be achieved,” Lipton said in a statement announcing the release of the funds.

“Notwithstanding the large fiscal adjustment, public debt remains high.”     

While the national bank had skillfully overseen monetary policy during “a very challenging period,” Lipton said, its independence had to be safeguarded to contain inflation and build foreign reserves with flexible exchange rates.