Kyiv, February 16, 2015 – International Monetary Fund and Ukraine have agreed on the new loan of $17.5bn that will be provided within 4 years under Extended Fund Facility program. Overall, Ukraine will get $40bn assistance from international financial organizations and Western governments. Around $15bn will be used to service external credit liabilities. Natalie Jaresko, Minister of Finance of Ukraine, told this during the press-briefing at Ukraine Crisis Media Center. “The Government of Ukraine insists on getting the largest tranche in 2015, which could reach 60% ($10.8bn) of the IMF financial package. These resources will supplement Ukraine’s foreign exchange reserves and finance necessary reforms to enhance the reputation of Ukraine among international investors,” Ms. Jaresko explained.
Ms. Jaresko noted that Ukraine will be able to get the first tranche only after members of the IMF Board give their consent, as well as the Ukrainian government confirms its intentions to conduct structural reforms. Natalie Jaresko said that the government has submitted amendments to the state budget for the parliamentary review. The Ministry of Finance forecasted state deficit growth from 3.7% to 4.1% due to the increase of energy subsidies for the population and social aid to more than 1 million of IDPs from eastern Ukraine. State revenues and expenditures will go up too because of hryvnia’s depreciation in the last two months. Thus the exchange rate accounted for in the new budget is 21.7 UAH to 1 USD. “If the parliament fails to approve these amendments, it will block Ukraine from getting essential funds,” Natalie Jaresko said.
Ms. Jaresko has highlighted that Ukraine starts to tackle deficiencies of the energy industry. The government will cut the amount of financial subsidies to Naftogaz from 31bn to 27.7m hryvnias. Moreover, the Ministry of Finance aims to increase rent rates from 20% to 70% for gas companies where the state has more than 50% stake in order to raise additional 9bn hryvnias to the budget. According to Ms. Jaresko, these funds will cover energy subsidies and social payments for IDPs. Natalie Jaresko also noted that the Ministry of Finance research tax practices for lottery businesses, which could deliver additional revenues to the state coffers.
Natalie Jaresko emphasized that the government proceeds with its ambitious anti-corruption program. It removed all intermediaries from its energy transactions, as well as eliminated Russian corruptive schemes thanks to the reverse gas flow from the European Union. Also, the government works with experts on amendments to the single social tax reform in order to get the Ukrainian economy out of shadow. “Once we create the National Anti-Corruption Bureau, we will show once gain that Ukraine’s pathway toward modernization and reform is irreversible,” Ms. Jaresko concluded.