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  • New hryvnia banknotes released on Nov. 26, 2019, by the press office of the National Bank of Ukraine.

    New hryvnia banknotes released on Nov. 26, 2019, by the press office of the National Bank of Ukraine. | Photo: National Bank of Ukraine

Published 8 December 2019
Opinion

The agreement was reached in a telephone call between Ukrainian President Volodymyr Zelensky and IMF Managing Director Kristalina Georgieva.

Ukraine’s government and the International Monetary Fund have reached an agreement Saturday on a new three-year US$5.5 billion loan, which will encompass economic and policy reforms.

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The agreement, which still must be approved by the fund’s management and the Executive Board, was reached in a telephone call between Ukrainian President Volodymyr Zelensky and IMF Managing Director Kristalina Georgieva.

“... the effectiveness of the arrangement will be conditional on the implementation of a set of prior actions,” Georgieva said in a statement, referring to the set of neoliberal structural reforms traditionally demanded by the agency to give out the loans. 

These usually include austerity measures such as a reduction in social spending, liberalization of markets and financial sector, massive layoffs, elimination of welfare schemes, and liberalization of labor laws. The IMF would then process the deal in the context of what it calls an Extended Fund Facility (EFF) over three years.

An EFF is used  "to assist member countries in overcoming balance of payments problems that stem from structural problems,” highlights IMF’s debt policy. Although details of how the money would be used over the plan’s three years weren’t given.

The growth of Ukraine’s gross domestic product (GDP) in July-September 2019 amounted to 4.2 percent compared to the same period in 2018, while in the second quarter the growth rate was higher and amounted to 4.6 percent, in the first quarter it amounted to 2.5 percent, according to the State Statistics Service.

According to the Ministry of Economy, the economic projection for  2020 stands at a 3.7 percent increase in real GDP instead of the previously projected 3.3 percent, but the estimate of economic growth in the next two years has not changed: in 2021 economic growth is expected to reach 3.8 percent, in 2022 some 4.1 percent.

Zelenskiy, who was elected in April on a platform focusing on economic reforms and fighting corruption, said in a statement that the program will accelerate growth.

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