Monday, April 3, 2017

IMF Releases US $ 1 Billion For Ukraine

The International Monetary Fund (IMF) released on Monday a billion dollars loan to Ukraine, a payment that had been postponed due to the blockade imposed on the separatist east.

Ukrainian President Petro Poroshenko said on his Facebook page that it was "another sign of the reforms being implemented in Ukraine."

The IMF said that this new payment raised the funds paid by the Fund to the $ 17.5 billion aid package in Kiev in 2015, In exchange for rigorous measures.

The IMF's Board of Trustees was initially scheduled to consider granting a new tranche of this appropriation on 20 March. He had postponed this discussion indefinitely to evaluate the consequences of the decision of Kiev to end its trade links with the eastern regions under the control of the pro-Separatist separatists.

As a result of this blockade, the central bank lowered its forecast of 2017 gross domestic product growth to 1.9% from 2.8% previously. It had previously estimated growth at 1.8% in 2016, marking a tentative recovery after a collapse of nearly 15% over the previous two years.

According to the central bank, exports of the metallurgical industry, concentrated in the East, will decline while imports of coal will increase. Kiev will have to find other sources of supply than the coal mines of the separatist regions.

The conflict in the East has killed more than 10,000 people in three years.

"The Ukrainian economy is showing welcome signs of recovery, growth has returned, inflation has been lowered and international reserves have doubled, much to the decisive actions of the authorities, including good macroeconomic policies. Recent stabilization lays the foundation for further growth, "IMF Deputy Director-General David Lipton said in a statement.

- Structural reforms -

He stressed, however, that structural reforms are still needed to "achieve faster and sustainable growth, increase incomes and allow Ukraine to catch up with other countries in the region." He cited the need to further privatize and create a market for agricultural land.

"Corruption must be vigorously combated," he said, adding that the creation of new structures had not yet yielded concrete results in this area.

The IMF also considered that the public debt remained too high and called for a rapid reform of the pension system with longer working hours. He praised the Central Bank's policy, saying its independence should be preserved.

Concerning the banking sector, he added that the renationalisation of the country's largest bank had preserved financial stability but must be followed by "determined efforts to ensure repayment of loans in order to minimize the cost to taxpayers ".

The Ukrainian central bank has called the vote of confidence by the international financial community the decision of the IMF. She believed that her work to consolidate the banking sector had largely contributed to the IMF's ability to release the funds. "This will send a clear message to all those who have tried to illegally exploit the banking sector to their advantage," the central bank said in a statement.

In mid-March, President Poroshenko imposed sanctions on subsidiaries of Russian public banks operating in Ukraine, including the public giants Sberbank and VTB, forbidding them to withdraw funds from the country.

Ukraine is also facing the threat of "zombie" banks that the central bank is trying to eliminate but are able to "resuscitate" through court rulings. These banks have lower assets than poor quality loans, posing a significant risk of never being repaid. In difficulty, they require the help of the public authorities to continue functioning.

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