MOSCOW, August 29 (RIA Novosti) – The International Monetary Fund (IMF) has approved the second installment of financial aid to Ukraine, totaling $1.39 billion, the fund said in a statement Friday.
“The Executive Board of the International Monetary Fund (IMF) today completed the first review of Ukraine’s performance under an economic program supported by a Stand-By Arrangement (SBA),” the organization said in a statement.
“The completion of this review enables the disbursement of SDR 914.67 million (about US$1.39 billion), which would bring total disbursements under the arrangement to SDR 2.97 billion (about US$4.51 billion),” the statement reads.
Ukrainian Prime Minister Arseniy Yatsenyuk said in a brief statement on his Facebook page that “The IMF executive board has voted unanimously to allocate another installment of budgetary support for Ukraine.”
The IMF also approved the Kiev's request for merging the third and fourth tranches of its financial assistance to Ukraine, giving the country a bailout of up to $2.3 billion by the end of 2014.
Following the Executive Board discussion, IMF Managing Director Christine Lagarde said that “The escalating conflict in the east and ongoing geopolitical tensions have weighed heavily on [Ukriane's] economy and society, causing a deeper recession and deviations from program targets in the short term, in particular on the central bank’s net international reserves and the budget and Naftogaz deficits.”
To compensate for these deviations, the Kiev authorities have to take steps to accumulate international reserves, tighten the fiscal stance in 2015–2016 relative to the initial program targets, and step up efforts to put Naftogaz on a sound financial footing, according to Lagarde.
Kiev received the first IMF loan tranche of $3.16 billion in early May after the IMF approved a $17 billion loan to Ukraine in the form of a two-year stabilization program. To receive the IMF funds, Ukraine agreed to a severe austerity program that includes shedding 24,000 government jobs, raising taxes, selling off state assets and withdrawing subsidies on natural gas.
