Ukraine expecting $5 billion IMF loan today
Ukrainian leadership expects the IMF to approve a $5 billion loan today, before the disbursement of the first $1.9 billion tranche tomorrow.
The Ukrainian economy has been battered to the brink by the COVID-19 pandemic. With its GDP in free fall and wheat export quota exhausted, it is at risk of sovereign default.
The country has long struggled to contrive the prerequisite reforms demanded by the IMF, hamstrung by alleged government corruption. But approval of the loan package would be a clear reflection of Kyiv’s commitment to long-term reform. A recently passed bill—which includes preventative measures against the private repossession of insolvent banks, boosting the likelihood of IMF aid—would preclude the reclamation of PrivatBank, Ukraine’s largest lender that was nationalised in 2016 following criticism for shady lending practices.
A likely agreement would reaffirm IMF support for Kyiv amid the ongoing Russia-Ukraine conflict resolution in the Donbass region and Crimea. A rejection of financial assistance would raise a red flag to other international creditors, undermine the credibility of recent Ukrainian reform efforts and compromise the country’s long-term economic recovery.
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