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Ukraine: World Bank Optimistic

  • Viktor Luhovyk

Kyiv, 19 Jun 1998 (RFE/RL) -- World Bank officials say they intend to continue cooperation with Ukraine, and might approve new projects for the country after top Bank officials complete their assessment of the situation in Ukraine this week.

World Bank Director for Ukraine and Belarus, Paul Siegelbaum, started negotiations with top government officials Tuesday, and was holding meetings with President Leonid Kuchma and Prime Minister Valery Pustovoytenko yesterday and today.

A source close to the talks tells RFE/RL that it is expected the World Bank will ease the pressure on Ukraine, and resume work on a number of large-scale projects, providing over $1 billion in loans for Ukraine by 2000.

Ukraine and the World Bank are currently working on more than 30 projects - approved earlier - collectively worth more than $2 billion - of which Ukraine has already drawn more than $1 billion.

However, the Bank suspended work on approving new projects in March, after the International Monetary Fund (IMF) halted its loans, citing lack of progress in economic reforms and poor fiscal performance. World Bank officials said, at the time, the Bank's future cooperation with Ukraine would depend on the resumption of IMF loans to the country. Members of the Bank mission currently in Kyiv reiterated that.

"There is very strong correlation (between the Bank's decision to provide money for a country and its relations with the IMF)," said Gregory Jedrzejczak of the World Bank private and financial development sector unit for Europe and Central Asia. "The Bank does not give money to a country if it does not have an agreement with the IMF."

The World Bank delegation's visit to Kyiv coincided with the arrival of an IMF mission, which came to assess Ukraine's ability to qualify for a three-year $500 million Extended Fund Facility loan to support structural reforms. The IMF already rejected this loan to Ukraine last year, after the country failed to meet some of more than 40 requirements put forward by the Fund.

But, despite difficulty to predict the result of the ongoing talks between Ukraine and the IMF, the World Bank mission has already discussed the possibility of starting new projects.

Three new projects that were discussed in Kyiv this week amount to $1 billion, include a $500 million loan to support private businesses, a $300 million credit for restructuring Ukraine's financial sector and a $250 million loan to develop financial services.