After long wait, Ukraine secures new IMF loan and programme extension

Ukraine had secured a loan deal last year as the country tumbled into recession due to the coronavirus pandemic.
Ukraine had secured a loan deal last year as the country tumbled into recession due to the coronavirus pandemic.PHOTO: REUTERS

KIEV/WASHINGTON (REUTERS) - Ukrainian President Volodymyr Zelensky's government secured a long-awaited loan tranche worth nearly US$700 million (S$956 million) from the International Monetary Fund on Monday (Nov 22) and an extension of its US$5 billion stand-by programme until next June.

Ukraine had secured a loan deal last year as the country - one of Europe's poorest - tumbled into recession due to the coronavirus pandemic. But loan disbursal stalled over concerns about reforms and the independence of the central bank.

The latest agreement is a boost for Mr Zelensky's government, which is grappling with surging coronavirus cases, higher inflation and growing jitters about Russian troop movements on its eastern borders.

"Grateful to @IMFNews Board of Governors for the decision to complete the review of the stand-by program on the allocation of a tranche of about US$700 million," he wrote on Twitter. "We'll use these funds to support the financial system & combat #COVID19 consequences. The IMF programme will be continued."

The IMF said in a statement, without giving specifics, that its board had agreed to a rephasing of loan disbursements.

The programme commits Ukraine to keeping its debt sustainable, safeguarding the central bank's independence, bringing inflation back into its target range and tackling corruption, the IMF said.

"Ukraine's IMF-supported economic programme 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," it said.

Ukrainian bond prices tumbled to their lowest in over a year on Monday as worries about an escalating conflict with Russia mounted.

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