WASHINGTON, April 3 – The International Monetary Fund on Monday approved disbursement of about $1 billion loan to Ukraine after completing review of the country’s economic reforms, the IMF reported.

The move by the IMF’s executive board increases to $8.38 billion money that has so far been released to Ukraine within the four-year $17.5 billion loan program known as the Extended Fund Facility, or EFF.

“The Ukrainian economy is showing welcome signs of recovery. Growth is returning, inflation has been brought down, and international reserves have doubled. This progress owes much to the authorities’ decisive policy actions, including sound macroeconomic policies,” David Lipton, IMF first deputy managing director and acting chair, said.

“The recent stabilization provides a promising basis for further growth,” he said.

However, the IMF also urged Ukraine to accelerate privatization and speed up structural reforms in order to achieve faster economic growth that would lift incomes of Ukrainians.

“To achieve faster, sustainable growth, needed to lift incomes and enable Ukraine to catch up with its regional peers, structural reforms to improve the business environment and attract investment need to be accelerated,” Lipton said.

He also urged Ukraine to develop a market for agricultural land and to “tackle corruption decisively” to address complaints from businesses. He also said that comprehensive pension reform is due by raising retirement age, a sensitive issue among political parties.

“Notwithstanding the large fiscal adjustment, public debt remains high. The urgency of structural fiscal reforms to ensure medium-term sustainability has increased, as pressures to raise wages and pensions are building,” Lipton said.

“Ukraine cannot afford to delay comprehensive pension reform much longer, including by raising the effective retirement age,” he said.

Sustained efforts are also needed to improve revenue administration and advance public administration reform.

“The National Bank of Ukraine (NBU) has skillfully managed monetary policy during a very challenging period,” Lipton said, adding that “It will be important to safeguard the NBU’s independence and for monetary policy to remain focused on containing inflation and rebuilding international reserves within a flexible exchange rate regime.”

“Impressive progress has been made in rehabilitating the banking system, but efforts need to continue to restore banks’ soundness and reinforce their ability to support growth,” Lipton said.

“The recent nationalization of Ukraine’s largest bank was an important step to safeguard financial stability, but must now be followed by firm efforts to ensure repayment of loans to minimize the cost to taxpayers,” he said. (ez/ez)