Ukraine gets new IMF loan and program extension after long wait

KYIV / WASHINGTON, Nov. 22 (Reuters) – The government of Ukrainian President Volodymyr Zelenskiy on Monday secured a long-awaited loan tranche worth nearly $ 700 million from the International Monetary Fund and an extension of its stand-by program $ 5 billion until next June.

Ukraine secured a loan deal last year as the country – one of the poorest in Europe – entered recession due to the coronavirus pandemic. But loan disbursement has been stalled due to concerns about reforms and central bank independence.

The latest deal is a boost for Zelenskiy’s government, which is grappling with an increase in coronavirus cases, higher inflation and growing nervousness over Russian troop movements on its eastern borders.

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

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

The program commits Ukraine to keeping its debt sustainable, preserving the independence of the central bank, bringing inflation back to its target range and fighting corruption, the IMF said.

“Ukraine’s IMF-backed economic program aims to help the authorities cope with the effects of the COVID-19 shock, support economic recovery and advance important structural reforms to reduce key vulnerabilities,” said he declared.

Ukrainian bond prices fell to their lowest level in more than a year on Monday as concerns about an escalating conflict with Russia mounted.

Coronavirus cases and deaths hit record highs in the country in November, prompting the government to restrict access to shops, businesses and public transport.

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Reporting by Matthias Williams and Natalia Zinets in Kiev and David Lawder and Andrea Shalal in Washington; Editing by Bill Berkrot

Our Standards: Thomson Reuters Trust Principles.

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