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`IMF and Ukraine reach tentative $5.5 bn aid deal
WASHINGTON, Dec 8, 2019 (BSS/AFP) – The International Monetary Fund said
Saturday it had reached an agreement in principle with Ukraine on a new $5.5
billion, three-year aid program for the war-scarred country.
IMF Managing Director Kristalina Georgieva welcomed the deal, adding it
was subject to IMF management approval.
Georgieva said she spoke by telephone on Saturday to President Volodymyr
Zelensky and commended him on “impressive progress” on reforms and “sound
economic policies.”
“The President and I agreed that Ukraine’s economic success depends
crucially on strengthening the rule of law, enhancing the integrity of the
judiciary, and reducing the role of vested interests,” she said.
She added that it was “paramount to safeguard the gains made in cleaning
up the banking system and recover the large costs to the taxpayers from bank
resolutions.”
The IMF and other international donors have repeatedly pressed Kiev to
attract much-needed investment by addressing pervasive corruption and
reducing the power of oligarchs.
But bankers and analysts said they fear the current authorities are
targeting former bankers who have helped clean up the market instead of the
oligarch owners of banks that go bankrupt.
Georgieva said that the effectiveness of the new program would be
“conditional on the implementation of a set of prior actions.”
– War budget –
Ukrainian lawmakers in November authorized an increase in defense spending
to record levels as Zelensky vows to end the country’s long conflict with
Russian-backed separatists.
Approving the 2020 budget, lawmakers voted for a 16 percent increase in
both defense and security spending, bringing it to nearly $10 billion, or
5.45 percent of gross domestic product.
At his inauguration in May, the 41-year-old president — a former comedian
— urged people with Ukrainian heritage to return home and help build a “new,
strong and successful Ukraine.”
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The country is also in the spotlight due to the impeachment proceedings
against US President Donald Trump.
Trump is accused of abusing his office by pressuring Ukraine to find dirt
on former US vice president Joe Biden, his potential challenger in the 2020
election.
The White House maintains Trump was simply encouraging the new government
of Ukraine to rein in corruption.
More than 13,000 people have been killed in Ukraine’s conflict with
separatists in the industrial east which broke out shortly after Moscow
annexed Crimea in 2014.
Ukraine’s economy has been hit hard by the conflict and the country has
struggled to keep up with arms purchases.
It is also reliant on foreign military help, including aid from the United
States that was temporarily frozen this year in a move now being scrutinized
in the impeachment probe.
Ukraine’s overall budget for 2020 set an economic growth target of 3.7
percent. It also set a deficit of 2.09 percent — in line with requirements
of the IMF.
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