Sunday, February 12, 2017

Week’s balance: EU’s generous gesture, IMF’s new commitments, acceleration of economy and inflation

Myroslava Naumchuk



/ soc-set.com

The European Union has promised Ukraine to imminently allocate the next tranche of its macro-financial assistance worth EUR 600 million; the IMF has confirmed that is in the final stage of the review of Ukrainian cooperation program; while the State Statistics Service reported on the acceleration of economic growth and inflation - these are the key economic news of the past week.



The second week of February brought some good news for Ukraine, which is emerging from the crisis. During his meeting with Ukrainian Prime Minister Volodymyr Groysman, European Commission President Jean-Claude Juncker said that the European Union in the coming weeks was ready to provide for Ukraine its second tranche of macro-financial assistance in the amount of EUR 600 million. At the same time, Juncker has reminded that the European Union wishes to finally see Ukraine abolish a ten-year ban on the export of round timber, introduced in 2015.

However, this time this barrier did not become an insurmountable obstacle for the allocation of a bailout.
Ukraine’s largest trading partner, the European Union in April 2014, after the Revolution of Dignity, had declared its readiness to provide financial assistance to Kyiv, totaling EUR 11 billion euros: EUR 1.6 billion in loans, EUR 1.4 billion in grants, and another EUR 5 billion - from the European Bank for Reconstruction and Development, as well as EUR 3 billion - from the European Investment Bank. 


As part of the loan program, Ukraine received a total of EUR 600 million euros. And in 2015, the EU has offered us a new package of aid credit totaling EUR 1.8 billion. Under this program, Ukraine has also received EUR 600 million.

However, the allocation of the next credit tranches has been suspended. It seems that Groysman managed to break the ice, convincing the leadership of our strategic partner that Ukraine was committed to reform.

The country’s key creditor, the International Monetary Fund, is also expecting the acceleration of economic reforms in Ukraine.

On February 9, IMF spokesman Gerry Rice confirmed that the Fund expected to hold a meeting of the Executive Board on Ukraine in the near future. He said that the Fund had held discussions with the Ukrainian authorities and there were some technical issues that should be addressed.


But soon they will be solved, he said. Thus, there is hope that the Ukrainian authorities will be able to break the vicious practice of previous years, when the program with the IMF stopped working after Kyiv received one or two tranches. Since March 2015, Ukraine has received three loan tranches totaling $7.62 billion of the promised $17.5 billion under a four-year EFF.



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