IMF confirms its decision to allocate $1 billion to Ukraine
The Board of Directors of the International Monetary Fund (IMF) completed the third review of the economic program of Ukraine within the framework of Extended Fund Facility (EFF). Completion of this review allows for the allocation of 734.05 million SDR (Special Drawing Right of about 1 billion dollars).
Thus, the total amount allocated to Ukraine will increase to 8.38 billion dollars from 2015.
This is affirmed in a statement issued by the Fund after the completion of the third review of the program of cooperation with Ukraine.
At the same time, the IMF calls for effective privatization and the launch of an agricultural land market in Ukraine.
After the decision, the First Deputy Managing Director of the IMF, Mr. David Lipton, said that the Ukrainian economy shows signs of recovery.
"[Economic] growth is returning, inflation is falling, and international reserves have doubled. This progress owes much to the authorities’ decisive policy actions, including sound macroeconomic policies," he noted.
At the same time, in order to achieve faster and more sustainable growth, which is necessary to increase incomes, it is necessary to accelerate structural reforms to improve the business environment and attract investment.
"A start needs to be made with privatization and developing a market for agricultural land," the IMF representative said.
He also noted that, despite large budget adjustments, public debt remains high.
"Ukraine cannot afford to delay comprehensive pension reform much longer, including by raising the effective retirement age. Sustained efforts are also needed to improve revenue administration and advance public administration reform," the IMF said.
In March 2015, the IMF opened a four-year EFF program in the sum of $17 billion for Ukraine. It envisioned a quarterly review of the program and the allocation of four tranches to Kyiv in 2015, with four more in 2016. However, the country has received only three tranches as of the current time: the first being $5 billion in March 2015, the second being $1.7 billion in August 2015 and the third $1 billion in September 2016.
The allocation of the fourth tranche was delayed because of the ongoing coordination of the reforms that Ukraine should undertake. In particular, among Ukraine's obligations are pension reform and the introduction of a land market reform.