Ukraine is set to receive a second installment worth $1.4 billion from the International Monetary Fund as part of its two-year, $17 billion bailout program from the Washington, D.C.-based lender.
After concluding a 23-day visit to Ukraine on July 17, IMF mission chief for Kyiv Nikolay Georgiev stated that Ukraine’s policies “have generally been implemented as planned and that all but one of the performance criteria for end-May have been met.”
He added that IMF’s executive
board will decide “within weeks” on whether to disburse the $1.4 billion.
The government received the first installment in May worth $3.2billion.
The IMF’s visit ended amid a
deteriorating situation in Ukraine’s two eastern-most regions where
Kremlin-backed militants continue to attack Ukrainian forces and illegally
occupy public buildings, destroying and damaging key infrastructure in the
process using Russian-made weapons and military hardware.
On the afternoon of July 17,
Russian-backed militants were suspected of shooting down a passenger jet in
Donetsk Oblast, killing all 298 people on board, with 80 children feared dead.
Then on July 18, a fire broke out at the Lysychansk oil refinery, said Iryna
Veryhina, the acting head of the Luhansk Oblast Administration.
“The Lysychansk oil refinery is burning:
50,000 tons of storage for oil waste, two 20-ton petrol containers, and the
sulfur storage warehouse are burning,” she wrote on her Facebook page.
Crude oil supplies to the oil refinery stopped in
March 2012 because it was not making a profit.
The plant near the city of Lysychansk, which has a
total annual capacity of around seven million tons of crude oil, was acquired
by Rosneft when it bought the TNK-BP oil firm last year.
Prime Minister Arseniy Yatseniuk says it will cost
more than $700 million to repair the damage done to infrastructure in eastern
Ukraine. But with continued fighting and collateral damage being done on a
daily basis to surrounding infrastructure, that price tag continues to rise.
“The conflict is putting (an) increasing strain on
the (IMF) program and a number of key elements of the macroeconomic framework
have had to be revised,” said the IMF’s Georgiev.
He added that the nation’s gross domestic product
will further shrink by 6.5 this year, compared to 5 percent when the program
was adopted. A shortfall in revenue collection in the East will compound the
problem, as will higher security spending, and lower-than-expected debt
collection by state-owned oil and gas enterprise Naftogaz, as well as
higher-than-expected capital outflows and monetization of fiscal deficits
causing pressures on net international reserves, according to Georgiev.
Kyiv Post editor Mark Rachkevych can be reached
at [email protected].
