IMF Approves $699 Million for Ukraine, Extends Loan Program

Daryna Krasnolutska

23 Nov 2021, 06:10 PM IST

(Bloomberg) -- The International Monetary Fund approved a new tranche of aid to Ukraine and extended a $5 billion loan program by six months as the country pledged to progress in implementing reforms.

The 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,” the Washington-based lender said in a statement on its website Monday.

Ukrainian authorities are able to draw the equivalent of about $699 million through the extension of the arrangement, the IMF said. They agreed to return to fiscal policies that will enable debt sustainability, and pledged to safeguard central bank independence, tackle corruption and work on judicial reform.

The approval follows the IMF’s resumption of the program, which was frozen for more than a year because of a lack of progress toward reforms needed to fight graft and ensuring the independence of the central bank.

Ukraine is also grappling with a stuttering economic recovery that’s been undermined by a surge in new Covid cases and a low vaccination rate. Tension is also building over a troop buildup on its borders that has prompted warnings that Russian President Vladimir Putin may be planning a winter invasion.

The central bank has been a particular focus after its governor abruptly departed last year, complaining of political meddling. His replacement, picked by President Volodymyr Zelenskiy, has caused controversy for upsetting the team he inherited, prompting several waves of departures.

Rulings from the Constitutional Court that have undermined anti-corruption bodies have also contributed to delays in cooperation with the IMF.

The resumption of aid would follow the IMF’s transfer in August of $2.7 billion in special drawing rights to Ukraine as part of a global allocation to ease the financial pain from the pandemic.