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IMF allocates $1.5 bln to Ukraine

23 December 2010 08:13 (UTC +04:00)

Baku - APA-Economics. The International Monetary Fund agreed to disburse $1.5 billion to Ukraine and urged the government to stick to planned budget cuts after reviewing the countryâ€™s progress in meeting terms of a $15.3 billion loan, Bloomberg reported.

â€œFiscal adjustment remains at the core of the program,â€ First Managing Director John Lipsky said in an e-mailed statement after a meeting today by the IMF board. â€œSwift approval of the 2011 budget consistent with program targets, along with tight control over budget execution and efforts to improve tax administration, will be crucial.â€

The IMF agreed in July to provide a 29-month loan to Ukraine, the countryâ€™s second bailout in two years after the global financial crisis cut demand for its exports and the economy shrank 15.1 percent in 2009.

The government agreed to narrow its budget deficit to 3.08 percent of gross domestic product in 2011 from 5.5 percent this year and pledged to raise the retirement age over the next decade, according to a draft law submitted by the government to the parliament.

Changes to the pension system, public administration and state-owned companies will be key for longer-term fiscal sustainability, Lipsky said.

Ukraine should â€œexpedite the implementation of measures necessary to tackle the problem of sizeable impaired assets in the banking systemâ€ hindering the financial sectorâ€™s support to â€œa sustainable economic recovery,â€ he said.