The World Bank's Board of Executive Directors has approved the Programmatic Financial Rehabilitation Development Policy Loan 1 (PFRL 1) for Ukraine in the amount of $400 million.
The decision was taken at a meeting in Washington on September 17, the World Bank said in a press release.
“Key elements of reforms supported by PFRL 1 include the creation of
a transparent process to ensure that banks are recapitalized with
private funding and where that is not possible, recapitalized or
resolved with public resources at the lowest possible cost. The reforms
also included the recapitalization of three systemically important
banks following this process,” reads the document.
In addition, PFRL 1 supports the approval of legal amendments that
will make it faster to deal with vulnerable banks and will lower the
cost to tax payers. The loan strengthens operations and the design of
emergency funding arrangements for the Deposit Guarantee Fund – which
insures the savings of depositors.
PFRL 1 is the first of two development policy loans designed to
address the impact of the financial sector crisis in Ukraine. The first
loan aims to restore the stability of the core banking sector in the
face of the ongoing crisis, while PFRL 2 will be aimed at restructuring
the sector and enhancing the legal and regulatory framework to make it
more resilient to future crisis.
