Premier says Ukraine will get third tranche from IMF by end of this week

Prime Minister of Ukraine Yulia Tymoshenko speaks at a CMU sitting

Ukraine will receive the third tranche under the Stand-By Arrangement with the International Monetary Fund (IMF) by the end of this week, Prime Minister Yulia Tymoshenko said while opening the government meeting on Wednesday.

According to IMF First Deputy Managing Director and Acting Chair John Lipsky, Ukraine's further cooperation with the International Monetary Fund (IMF) under the Stand-By Arrangement will help the country create the conditions that facilitate an expeditious economic recovery, he said while commenting on the IMF's decision to release USD 3.3 billion as the next tranche to Ukraine, the fund's press service reported.

"Financial stress has eased in recent months and Ukraine's current account is adjusting rapidly. At the same time, the fall in output is more pronounced than expected, which has necessitated further significant policy adjustments," he said.

In his opinion, the "revised economic program continues to seek to mitigate the effects of the global crisis, restore confidence in the banking system, and preserve fiscal sustainability, while protecting the most vulnerable segments of the population".

"To cushion the impact of the sharper economic contraction and to reflect the imbalances of the state gas company Naftogaz, the revised economic program targets a broadened fiscal deficit. Corrective fiscal measures and structural reforms are a priority to ensure fiscal sustainability and to avoid crowding out of private sector borrowing," Lipsky said.

He also said that the Ukrainian government had taken a number of important decisions required to stabilize the economic situation in the country. "The authorities have reduced nonpriority expenditures as well as taken a number of steps to restore viability in the natural gas sector. A key step is a schedule of natural gas price increases to bring domestic prices in line with international prices. Vulnerable households will be protected by a better targeting of the social safety net programs," he said.

"The authorities are also moving ahead with a strategy to strengthen the financial situation and transparency of Naftogaz. Plans for pension and tax reforms in the context of the 2010 budget will also help entrench fiscal sustainability and reduce fiscal financing needs," he added.

As reported, the Executive Board of the International Monetary Fund (IMF) has completed the second review of Ukraine's economic performance under the two-year Stand-By Arrangement (SBA), and approved the immediate release of the third tranche worth around USD 3.3 billion under the arrangement

The IMF approved the two-year Stand-By Arrangement (SBA) with Ukraine on November 5, 2008 in an amount equivalent to SDR 11 billion (about USD 16.4 billion) to tackle the consequences of the global financial crisis. The first disbursement of USD 4.5 billion under the SBA was allocated last November, while the release of the second tranche worth USD 2.8 billion was approved on May 8, 2009.

An IMF mission worked in Ukraine late in June - early in July, and following its visit to the country, it proposed that the IMF Executive Board allocate USD 3.3 billion as the next tranche to Ukraine. The fourth disbursement under the SBA should be USD 3.8 billion.

UKRINFORM