Ukraine, IMF to sign $5 billion loan programme

Ukraine is set to ink an agreement with its global funding source for a fresh $5 billion loan assistance to solve its land issues and budget shortfall, sources revealed to Bloomberg on Sunday.

News of the loan programme comes days following Ukrainian Prime Minister Oleksiy Honcharuk’s acknowledgment that delegates of the International Monetary Fund had arrived in the country to set in motion new financial initiatives with its economic leaders.

An extended loan package will replace Ukraine’s current short-term loan framework, with the new program seen to be implemented in three years, sources with knowledge of the ongoing talks disclosed.

Days prior to the Bloomberg report, Honcharuk said that it is very presumptive to discuss the results of the ongoing talks. Ukraine, sources said, will receive approximately $5 billion in a program covering a three-year period.

These, on conditions that the country would address the growing problem of irregularities and corruption, cut its budget shortfall and carry out new land regulations in line with the government’s lifting of its temporary prohibition on land rules.

The moratorium on the sale of farm properties was launched in 2001 until a new land policy could be imposed. However, nothing of substance came out of the proposition and the postponement remained in place since then.

Lifting the suspension, according to World Bank regional director for Ukraine Sato Kahkonen, would greatly improve the economy’s gross domestic product by more than 2 percent.

Before he sat down in August as the country’s premiere, Honcharuk stressed that the country wanted to upgrade its current $3.9 billion standby reserve with the IMF, which expires by the end of 2019, and replace it with a long-term plan. The IMF representatives will be in Ukraine until Sept 26.

The state-approved model, based on Ukrainian press reports, is that farm lots will be sold exclusively to the country’s own people or privately-held enterprises. Limitations as per the market value of the piece of real estate that can be acquired will be imposed: no more than 30 percent of the actual land covered in local areas will be sold to one individual or groups, 20 percent in a so-called oblast and the rest countrywide.

However, the IMF reserves the right to change its ruling and scrap the loan agreement if certain Ukraine fails to meet specific requirements and conditions.

Oligarch Ihor Kolomoisky and his followers have pressured the country’s central banking institutions including PrivatBank, the nation’s biggest bank established by Kolomoisky after regulators found a $5.5 billion anomaly in its ledgers.

Source: Business Times