The International Monetary Fund will lend up to $5 billion over the next 18 months to help Ukraine’s economy, which is expected to shrink by 8.2% this year because of the COVID-19 crisis, the fund’s press service stated late on June 9.
Managing director and chair Kristalina Georgieva acknowledged the severity of the crisis, but said Ukraine needs to take several steps to mitigate the economic risks, including a better fight against corruption. “The uncertainty about the severity and length of the global downturn is exceptionally high,” she said.
The IMF immediately will immediately disburse $2.1 billion. This sum will arrive on June 11, according to the Finance Ministry. Unlike the IMF lending in previous years, which usually went to the National Bank of Ukraine, this money will help finance a budget deficit that is expected to reach 7.7% of the economy. Ukraine’s nominal GDP is expected to be about $150 billion in 2020, still $33 billion less than it was in 2013.
Further lending is contingent on Ukraine executing a number of policies that include supporting households and businesses, ensuring the independence of the National Bank of Ukraine, financial stability and structural reforms to tackle corruption. Some key requirements such as the lifting of a moratorium on farmland sales and measures to protect the nationalization of PrivatBank from its former owner, the billion oligarch Ihor Kolomoisky, took longer than expected.
Ukraine’s parliament passed a law on May 31 legalizing the sale of farmland, although in a watered-down version, and lifting the country’s 19-year moratorium on land transactions, coming into effect on July 1, 2021.
It was one of the two main requirements for Ukraine to receive further financial assistance from the IMF, as well as the bank law, passed in May 13, dubbed the “anti-Kolomoisky” bill after the oligarch who has been attempting to regain control over PrivatBank, Ukraine’s largest bank, which was nationalized in 2016. The state alleges that, under the ownership of Kolomoisky and his business partner Hennadiy Boholyubov, a total of $5.5 billion was stolen from the bank through insider loans.
