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IMF approves allocation of next tranche of $1.7 billion to Ukraine

July 31, 2015, 19:52 UTC+3 WASHINGTON DC
The total amount allocated to Kiev is $6.68 billion
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IMF headquarters

IMF headquarters

© EPA/JIM LO SCALZO

WASHINGTON DC, July 31. /TASS/. The Board of Directors of the International Monetary Fund (IMF) has approved the allocation of the next tranche of financial assistance to Kiev in the amount of $1.7 billion, the organization said in a statement on Friday.

"The IMF Board of Directors completed the first review of the program in Ukraine today, and extended the agreement in the expanded funding program (EFF). The completion of the review entails the allocation of approximately $1.7 billion to Ukraine, resulting in the total amount allocated to Kiev $6.68 billion, under the agreement," the statement said.

In early July, an IMF mission approved the revision of the cooperation program with Ukraine. On July 7, the Verkhovna Rada adopted four laws that will allow it to receive more loans from the international financial institution. Three laws provide an opportunity to unlock the IM's allocation of $1.7 billion to Ukraine in the second tranche of the loan, and another law will provide the opportunity for an additional $1 billion from the World Bank, €200 million from Germany and $300 dollars from Japan.

Ukraine received the first tranche from the IMF worth $5 billion in the spring of 2015.

At the beginning of the month, Ukraine’s Minister of Economic Development Aivaras Abromavicius was concerned that his country would not receive the next IMF tranche, because of the laws that were set in place. "The law [on restructuring currency loans to individuals] runs counter to Ukraine’ liabilities before the IMF. So, if the law is not cancelled Ukraine will have no tranche," he said, adding that such laws were evidence of poor coordination between the government and the parliament.

The minister said he hoped the law would soon be revoked, if nor by the Verkhovna Rada (parliament), then by a presidential veto.

On Thursday, July 2, Ukraine’s Verkhonva Rada passed a law on restructuring currency loans to individuals. The law was passed by 229 votes when 226 votes were needed.

The law provides for a mechanism of settling problem issues of individuals having liabilities under consumer loans drawn to buy real estate. The document distributes financial responsibility between the government, banks and borrowers. The law was passed after three readings, each of which stirred heated debates at the Rada and protests of borrowers.

Most of borrowers are unable to repay their currency loans due to a dramatic decline in the hryvnia (Ukraine’s national currency), high interest rates and overall deterioration of living standards on the backdrop of the economic crisis.

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