After long wait, Ukraine secures new IMF loan and program extension

Ukrainian President Volodymyr Zelenskiy’s government secured a long-awaited loan tranche worth nearly $700 million from the International Monetary Fund (IMF) on Monday, November 22, and an extension of its $5-billion stand-by program until next June.

Ukraine had secured a loan deal last year as the country – one of Europe’s poorest – tumbled into recession due to the coronavirus pandemic. But loan disbursal stalled over concerns about reforms and the independence of the central bank.

The latest agreement is a boost for Zelenskiy’s government, which is grappling with surging coronavirus cases, higher inflation, and growing jitters about Russian troop movements on its eastern borders.

“Grateful to @IMFNews Board of Governors for the decision to complete the review of the stand-by program on the allocation of a tranche of about $700 million,” he wrote in a tweet. “We’ll use these funds to support the financial system & combat #COVID19 consequences. The IMF program will be continued.”

The IMF said in a statement that its board had agreed to a “rephasing” of loan disbursements without giving specifics.

The program commits Ukraine to keeping its debt sustainable, safeguarding the central bank’s independence, bringing inflation back into its target range, and tackling corruption, the IMF said.

“Ukraine’s IMF supported economic program aims to help the authorities address the effects of the COVID-19 shock, sustain the economic recovery, and move ahead on important structural reforms to reduce key vulnerabilities,” it said.

Ukrainian bond prices tumbled to their lowest in over a year on Monday as worries about an escalating conflict with Russia mounted.

Coronavirus cases and deaths hit records in the country in November, prompting the government to restrict access to shops, businesses, and public transport. – Rappler.com