The International Monetary Fund said its board on Wednesday approved a long-awaited loan disbursement to Ukraine of about $1 billion after a review of the country’s bailout program. The IMF has agreed to pump $17.5 billion into Ukraine’s economy in a four-year bailout, releasing the funds in installments subject to the government making progress on economic and anti-corruption reforms.
To date, Ukraine has received about $7.62 billion in the program launched in March 2015. The latest disbursement was less than the roughly $1.7 billion anticipated, after some reforms required by the fund had stalled. But the IMF said in a statement that the board had approved waivers for Kiev’s failure to meet criteria related to international reserves targets, external payments arrears and foreign exchange restrictions.
President Petro Poroshenko said the disbursement would clear the way for an additional $1 billion U.S. loan guarantee and a new 600 million-euro loan from the European Union. In a statement, he said a Russian attempt to undermine the IMF’s decision had failed, and that the funds’ release would help keep the hryvnia currency stable and aid the economy.
“The positive decision by the IMF is evidence that the world recognises that reforms are happening in Ukraine, that real and positive changes are happening in Ukraine, and that the country is moving in the right direction,” Poroshenko said. Last week, Ukrainian Finance Minister Oleksandr Danylyuk said the IMF decision should clear the way for the sale of about $1 billion in U.S.-guaranteed bonds by the end of September.
IMF Managing Director Christine Lagarde said in a statement after the board’s vote that Ukraine was showing signs of recovery and improved confidence, which she attributed to the implementation of reforms, sound macroeconomic policies and efforts to rehabilitate Ukraine’s banking system. “Further progress in fiscal reforms is key to ensure medium-term sustainability,” Lagarde said, calling for pension reforms and tax policies that would avoid higher deficits, and the restructuring of state-owned enterprises.