IMF approves release of around $1.4 bn to Ukraine

The International Monetary Fund yesterday approved the release of around $1.4 billion in fresh funds for troubled Ukraine, where fighting with pro-Russia separatists had escalated, AFP reported.

According to the Fund, Kiev had "generally" implemented economic reforms required under the support programme launched in April, though it had missed targets for building up reserves and cutting the deficit of the government.

However, it said the urgent support programme marshalled for the economy by the IMF, US and Europe in April remained deeply at risk.

The programme "continues to hinge crucially on the assumption that the conflict will subside in the coming months," it added.

IMF managing director Christine Lagarde applauded the progress made by the government that took over after pro-Russia president Viktor Yanukovych was overthrown.

"However, the escalating conflict in the East and ongoing geopolitical tensions have weighed heavily on the economy and society, causing a deeper recession and deviations from program targets in the short term," she said in a statement.

And even as the government remained committed to closing its deficit, improving the climate for business, and fighting corruption, she said that risks to the programme "remained high".

"The program success hinges on a timely resolution of the conflict in the East, as well as on the authorities` strong policy performance and adherence to the planned reforms," she said.

The new funding has been approved after the IMF's Executive Board, its decision-making body, completed the first review of Ukraine's performance under an economic programme, Xinhua reported. With the latest funding the total disbursements have been brought up to $4.51 billion.

"Overall, economic policies have generally been implemented as agreed in the program, as the Ukrainian authorities have persisted in taking difficult measures despite the volatile political situation," the world lender said in a statement.

"However, the conflict in the eastern part of the country is taking its toll on the economy and society, and compensatory measures will be critical to achieve key program targets agreed for 2014 and beyond," noted the statement.

According to the world lender, the programme "remains highly challenging and continues to hinge crucially on the assumption that the conflict will subside in the coming months."

The IMF in April approved $16.67 billion of credit line as part of a $27-billion international rescue package to support the Ukrainian government's economic program, which aimed to restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth even as it protected the vulnerable groups.

"The Ukrainian authorities have firmly implemented policies to stabilize the economy and revive growth. This strong policy record despite the much worse-than-expected environment is encouraging in light of the implementation problems that derailed previous programs and thus augurs well for the authorities' ability to keep the program on track," IMF managing director Christine Lagarde said in a statement yesterday.