August 29, 2014
A condition of the funds is a severe austerity program including firing 24,000 government employees, removing gas subsidies, tax increasing and selling of state assets.
“The Executive Board of the International Monetary Fund (IMF) today completed the first review of Ukraine’s performance under an economic program supported by a Stand-By Arrangement (SBA),” the organization said in a statement.
This brings the total disbursements to US$4.51 billion and the nation may be eligible for another US$2.3 billion if a review is passed at the end of the year.
But the IMF also noted that the conflict in the east of the country will be resolved shortly.
“The conflict in the eastern part of the country is taking its toll on the economy and society, and compensatory measures will be critical to achieve key program targets agreed for 2014 and beyond,” according to the statement.
IMF Managing Director Christine Lagarde said the escalating conflict in the east is causing a “deeper recession and deviations from program targets in the short-term.”
She highlighted the IMF’s push for more austerity.
“Kiev authorities have to take steps to accumulate international reserves, tighten the fiscal stance in 2015–2016 relative to the initial program targets, and step up efforts to put Naftogaz on a sound financial footing,” according to Lagarde.
Ukraine’s previous two IMF programs were suspended after the government did not do as promised, such as raising natural gas prices.
The IMF also downgraded its growth forecast for Ukraine to a 6.5 percent contraction, worse than their previous 5 percent forecast.
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