By Eurasia Business News – July 3, 2021
The Ukraine’s Ministry of Finance confirmed on July 2 that the World Bank has granted a $ 350 million loan in support of critical reforms.
View on Kyiv, the capital and main economic center of Ukraine. Photo credit : Pexel.
Ukraine and the World Bank signed an agreement on a loan from the International Bank for Reconstruction and Development (IBRD) in the amount of $ 350 million, which should be used to develop the Ukrainian economy during the Covid-19 pandemic, provide social support to vulnerable groups of the population and strengthen state institutions.
The key reforms supported by the World Bank include: (i) strengthening land and credit markets by creating a transparent and efficient market for agricultural land and resolving non-performing loans in state owned banks; (ii) fostering de-monopolization and anti-corruption institutions including by restructuring the gas sector and (iii) bolstering the social safety net for the vulnerable elderly population to cushion the impact of the COVID-19 pandemic.
“The COVID-19 pandemic is resulting in a sharp economic downturn that is hurting the incomes of ordinary Ukrainians and small businesses, and straining the government’s budget,” said Arup Banerji, the World Bank Country Director for Belarus, Moldova, and Ukraine.
The press release of the financial institution explained the objective of this loan :
“This development policy loan provides $350 million to support budget expenditures at a difficult time. The World Bank welcomes the Government’s commitment to these reforms to prepare the economy for recovery, including the significant steps taken to end the moratorium on agricultural land sales, and to bolster benefits for the vulnerable elderly population.”
Another reform recommended by the Western partners of Ukraine is consolidating the restructuration of the gas sector made with the creation of an independent gas transmission system operator. This independent body is already helping safeguard Ukraine’s gas transit revenues. In addition, strengthening Ukraine’s anti-corruption institutions will help to establish a level playing field in the private sector and bolster investor confidence. Lastly, resolving non-performing loans in state-owned banks will help increase the efficiency and flow of credit to Ukrainian firms.
Read also : Ukraine wants a compromise with the IMF
The Ukrainian Central Bank recently reported that the non-performing loans ratio in Ukrainian banks declined from 48.4% (as of 1 January 2020) to 41% (as of 1 January 2021).
The development policy loan is part of the World Bank’s stepped-up support to Ukraine to address the impacts of COVID-19 and complements the approval of additional financing of $135 million for the Serving People, Improving Health Project and $150 million for the Social Safety Nets Modernization Project. Additional support to manage the consequences of the coronavirus pandemic on the most vulnerable citizens would be under preparation.
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