Ukraine reaches preliminary agreement with IMF

KIEV: The International Monetary Fund (IMF) said it had reached a preliminary agreement with Ukraine that could see the war-scarred and cashed-starved nation receive fresh aid in the first half of the year.

The news was particularly good for the ex-Soviet republic because the IMF statement referred to a loan of US$1 billion (0.9 billion euros) and not the lesser sums discussed in earlier months.

Ukraine also gets the reprieve of not having to go though the unpopular measure of raising its pension age to get the cash.

The step had been initially demanded by the IMF but strongly opposed to by Ukrainian lawmakers who want to avoid a voter backlash.

“The IMF staff has reached agreement with the Ukrainian authorities on an updated Memorandum of Economic and Financial Policies,” the Fund’s Ukrainian mission chief Ron van Rooden said in the statement.

“This paves the way for consideration of the third review of the arrangement under the Extended Fund Facility (EFF) by the IMF’s Executive Board ... in the second half of March,” the statement said in reference to a US$1 billion loan.

The IMF’s board usually follows through with such preliminary agreements and disburses aid once all the details have been hashed out.

The IMF had dragged its feet in disbursing help to Ukraine because of its unwillingness to follow though on tough belt-tightening measures.

It is far behind schedule since striking the US$17.5 billion deal in the first half of 2015.

Ukraine has thus far seen only US$7.3 billion of that money.

This has forced the pro-Western government to step up its pressure and ram through detested legislation such as the raising of utility bills.

Those had previously been state-subsidised and posed an extra burden on Ukraine’s shallow coffers.

The country has also repeatedly failed in its efforts to launch a meaningful privatisation drive that could help fill in the budget gap.

Attempts to put up land for sale have also been resisted by nationalist lawmakers and their allies who comprise a powerful contingent of the chamber.

Yet Ukraine has also seen some welcome news.

Advice from the IMF has helped it pull out of a tailspin 2014-2015 recession that saw the economy shrink by an astonishing 17 per cent.

Annualised inflation reached nearly 50 per cent in the most dire days.

The IMF did not provide any details about what concessions Kiev may have made in this round. — AFP