Roundup: Fresh IMF aid to play big role in Ukraine's economic development

A recent decision by the International Monetary Fund (IMF) to grant Kiev a new portion of financial aid will play a big role in the economic development of Ukraine, serving as a tool to stabilize financial markets, attract investment and push forward reforms, local experts said Tuesday.

The IMF executive board completed the third review of Ukraine's economic program late Monday, enabling a release of the fourth tranche worth 1 billion U.S. dollars from its 17.5-billion-dollar bailout package.

While commenting on the fund's decision, Ukraine's Finance Minister Oleksandr Danylyuk described it as a "real victory" for Ukraine and a contribution to Kiev's positive image as a reliable partner on the global stage.

"It has confirmed the ability of the Ukrainian authorities to fulfill their obligations," Danylyuk said.

According to the National Bank of Ukraine (NBU), the IMF loan will be transferred to the NBU's accounts soon to provide a cushion for the country's foreign exchange reserves.

Vasyl Furman, a member of the NBU council, explained that strong reserves are crucial to strengthen the local currency, the hryvnya, which has depreciated in the recent months mainly due to the economic blockade of the Donbas region in east Ukraine.

"The IMF decision will have a positive impact on the exchange rate of the hryvnya," Furman said.

Thanks to the aid, the NBU also plans to relax the financial market restrictions, including those on mandatory sales of hard currency earnings by exporters and on control of foreign cash purchases by individuals.

More importantly, the IMF decision would send a signal to investors that the situation in Ukraine is stable and predictable, thus contributing to an overall macroeconomic stabilization.

"The IMF move paves the way for fresh loans and investment in the Ukrainian economy from other international partners," said Furman.

In particular, the IMF assistance would likely clear the road for Ukraine to receive 600 million euros (about 640 million U.S. dollars) as a loan from the European Union as well as financial help from the World Bank.

In addition, the IMF funds, which were granted to Kiev in exchange for structural changes in Ukraine, are expected to push forward the much delayed reforms.

"The benefits of the aid go beyond receiving 1 billion dollars of the financial support. This also means that the land market will be finally opened, privatization programs will be finally implemented, the pension and the medical reforms will be introduced, and the law on the electricity market will be adopted," said Oleg Ponomar, an independent political observer.

If Ukraine implements all of the agreed reforms, it may receive three more tranches of the IMF aid, which are worth 4.5 billion dollars in total before the end of this year.

Under the cooperation program launched in 2015, the East European country has received more than 8 billion dollars from the global lender, which helped its economy to avoid collapse in the Ukraine crisis. Endi