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IMF Approves $1 Billion Loan For Ukraine After One-Year Delay

IMF Managing Director Christine Lagarde said the social and economic cost of Ukraine's crisis has been high.
IMF Managing Director Christine Lagarde said the social and economic cost of Ukraine's crisis has been high.

The International Monetary Fund on September 14 approved a loan disbursement for Ukraine of $1 billion after a delay of more than a year that reflected concern about corruption and stability in the war-torn nation.

The IMF in March 2015 had agreed to provide Kyiv with $17.5 billion over four years as long as the government continued to make progress on improving its management of the economy and fighting corruption.

To date, Ukraine has received about $7.62 billion of the loans. The latest disbursement was less than the $1.7 billion Kyiv hoped to get, showing the fund still has concerns about stalled reforms.

But the IMF said its executive board approved waivers allowing loans to resume despite Kyiv's failure to meet targets on limiting debt, boosting international reserves, and easing foreign exchange restrictions.

President Petro Poroshenko hailed the IMF's decision as a triumph, saying it would clear the way for an additional $1 billion U.S. loan guarantee and a new 600 million-euro loan from the European Union.

He said a Russian attempt to block the IMF's decision had failed and that the new loans would help keep the hryvnya currency stable and aid the economy.

"The positive decision by the IMF is evidence that the world recognizes that reforms are happening in Ukraine, that real and positive changes are happening in Ukraine, and that the country is moving in the right direction," Poroshenko said on Twitter.

Ukrainian Finance Minister Oleksandr Danylyuk said the IMF decision should clear the way for the sale of about $1 billion in U.S.-guaranteed bonds by the end of September.

Ukraine's economy has suffered a deep decline after two years of war with Russia-backed separatists in the east, where most of its industries are located. Its economic output plummeted by 9.9 percent in 2015.

IMF Managing Director Christine Lagarde said that Ukraine is showing "welcome signs of recovery" and improved confidence, which she attributed to the implementation of reforms, sound macroeconomic policies, and efforts to rehabilitate Ukraine's banking system.

"While the social and economic cost of the crisis has been high, growth is expected to be higher in the period ahead," Lagarde said.

"A sustainable recovery requires completing the structural transformation of the economy, where much remains to be done, including combating corruption and improving governance," she said.

With reporting by Reuters and AFP
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