Following Rocketing Heating Tariffs, IMF Releases $ 1.4 bln

Ukraine may get $ 1.4 billion from the International Monetary Fund (IMF), which says it is ready to allocate the first tranche of a new 14-month program. The total amount of the loan will be $ 3.9 billion, with Kiev able to take 1.4 billion "right now".

The new program will have four main priorities: continued fiscal consolidation, which implies a reduction in public debt; lower inflation while maintaining a flexible exchange rate regime; strengthening the financial sector, facilitating asset recovery and restoring Bank lending; and promoting a targeted set of structural reforms, especially to improve tax administration, privatization and governance.

“The Ukrainian authorities have successfully restored macroeconomic stability and growth with the support of the international community. Fiscal policy and a flexible exchange rate regime helped to reduce the budget deficit,” said IMF First Deputy Managing Director and Acting Chairman David Lipton.

He noted that the new reservation agreement will provide support for economic policy in the coming year. At the same time, the Fund notes that the implementation of some aspects of the program is subject to risks.

“The implementation of the program is subject to significant risks, both internal and external. The authorities have taken important steps to mitigate these risks, including by adopting a robust budget for 2019, raising gas and heating tariffs, and enacting legislation to improve governance in state-owned banks. Full and timely implementation of the program will be crucial for its success in the light of challenges,” the IMF representative stated.

Ukraine and the IMF agreed on a new program stand-by following rising heating tariffs which went up by 22.7%. The new agreement will replace the current EFF program, which expires in March 2019.

By Dimitri Dolaberidze

Image source: dawn.com