KIEV: The International Monetary Fund’s decision to release another $1 billion in loans to the country was “a real vote of confidence,” National Bank of Ukraine governor Valeria Gontareva says. The IMF yesterday agreed to release the latest tranche of a $17.5 billion rescue program, bringing total funds disbursed to about $8.4 billion, EurActiv reports. In its statement announcing the decision, the fund seemed to think Kyiv was making good progress on its commitments to, among other reforms, “restore external sustainability, strengthen public finances, maintain financial stability, and support economic growth by advancing structural and governance reforms, while protecting the most vulnerable.” Since being approved in 2015, the rescue plan has repeatedly been held up over perceptions Kyiv was not taking its commitments to reform the economy and combat corruption seriously enough, EurActiv comments.
Despite the high costs and economic disruption due to the three-year war with breakaway statelets in the eastern Donbas region, Ukraine’s economy is expected to grow by 1.9 percent this year after a 1.8 percent rise in 2016. But since the economy contracted by nearly 15 percent in 2014 and 2015 and had been in poor health for years before the war broke out, many Ukrainians may not have noticed much of an improvement in living standards. A new impediment to growth arose this year in the form of a blockade on most goods coming from the rebel territories. The central bank estimates the blockade will cost the economy one point of growth this year and could force the current account deficit up by 25 percent. In mid-March the IMF postponed a decision on the latest tranche of loans in order to assess the impact of the blockade. In a statement yesterday, the central bank said the fund had concluded the blockade would have a “relatively moderate impact” on growth, the balance of payments, and inflation.
