Ukraine and the International Monetary Fund have reached preliminary approval to restart lending which has been halted by sluggish progress on reforms.
Ron van Rooden, mission chief for Ukraine at the International Monetary Fund, said in a statement on March 4 in Washington, D.C., that the staff-level agreement paves the way for consideration by the IMF board of directors later this month of resumption of the IMF’s four-year, $17.5 billion lending program that started on March 11, 2015.
Another $1 billion would mark the fourth loan tranche and bring total disbursements in the 2015 program to $8.32 billion, the IMF said.
The lending program “aims to put the economy on the path to recovery, restore external sustainability, strengthen public finances, maintain financial stability, and support economic growth by advancing structural and governance reforms, while protecting the most vulnerable,” according to the IMF statement.
The last IMF mission visited Kyiv Nov. 3-17.
Ukraine has relied on numerous low-interest loans from the IMF since its national independence in 1991 after the collapse of the Soviet Union. But lack of reforms and endemic corruption have halted many of the programs.
Ukraine passed an IMF-compliant 2017 national budget of roughly $30 billion and has passed several banking reforms.
But in a Feb. 10 2016 statement, IMF Managing Director Christine Lagarde called on Ukraine to fight corruption in order to win further IMF lending.
“I am concerned about Ukraine’s slow progress in improving governance and fighting corruption, and reducing the influence of vested interests in policymaking. Without a substantial new effort to invigorate governance reforms and fight corruption, it is hard to see how the IMF-supported program can continue and be successful. Ukraine risks a return to the pattern of failed economic policies that has plagued its recent history. It is vital that Ukraine’s leadership acts now to put the country back on a promising path of reform,” Lagarde said.
