Sun, Aug 31, 2014 - Page 13 News List

IMF approves US$1.4bn aid payment for Ukraine

AFP, WASHINGTON

The IMF on Friday approved the release of nearly US$1.4 billion in fresh funds for troubled Ukraine, but warned that continued fighting could undermine the international bailout of the country.

The global crisis lender said Kiev had “generally” implemented economic reforms required under the support program launched in April, though it had missed targets for building up reserves and cutting its trade deficit.

However, it said that the support program marshaled for the economy by the IMF, the US and Europe in April remains deeply at risk.

The program “continues to hinge crucially on the assumption that the conflict will subside in the coming months,” the IMF said.

That challenge appeared even more stark after NATO said Russia had sent at least 1,000 troops to fight alongside the rebels and had massed 20,000 troops near the border.

Despite the escalation in the crisis, IMF managing director Christine Lagarde said the government that took over in Kiev after February’s overthrow of pro-Russian then-president Viktor Yanukovych had made progress on the economy.

While the Ukrainian government remains committed to closing its trade deficit, improving the business climate and fighting corruption, she said that risks to the program “remain high.”

Ukrainian Prime Minister Arseniy Yatsenyuk via Twitter welcomed the new funds on Friday as “a welcome sign of support and confidence.”

It was the second release of funds from the IMF’s program to help stabilize the economy and its currency, the hryvnia, battered by years of mismanagement and deep corruption and more recently by Russia’s seizure of Crimea and troubles with rebels in the country’s east.

Ukraine’s economy has contracted for nearly two years and continued to shrink in the April-to-June quarter.

In April the IMF approved a US$17 billion line of credit to Ukraine, part of a US$27 billion international rescue of the economy, but the first releases of funds have yet to stabilize the hryvnia.

The IMF has warned the economy could contract 6.5 percent this year, and last month Lagarde said the support marshaled by the international community might not be adequate to shore up Kiev’s finances.

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