KYIV, Jan 8 - The International Monetary Fund (IMF) has pointed out weak economic growth in Ukraine, according to a report by the Washington-based lender.
“Investment, particularly foreign direct investment, is held back by a difficult business environment, while large numbers of worker seek job opportunities abroad as economic growth is too low for incomes to noticeably close the gap with regional peers,” the IMF said in the report.
The report was published along with the text of the request for Stand-By Arrangement (SBA) and cancellation of arrangement under the Extended Fund Facility (EFF) of the Ukrainian government.
The Ukrainian authorities have been able to restore macro-economic stability and growth following the severe economic crisis of 2014–2015. However, efforts to create a more dynamic, open, and competitive economy have fallen short of expectations, and the economy still faces important challenges.
Ukraine last month won a new lending commitment from the IMF, a lifeline from the West for a country whose economy has been sapped by corruption and war with Russian-backed separatists.
Without the new support, it was unclear how the government would pay internal and external debt and finance a budget deficit, as the IMF had suspended an earlier bailout over worries about corruption. A year after Poroshenko’s pro-Western government came to power in 2014, the IMF agreed to loan Ukraine $17.5 billion over four years — and then suspended the aid in 2017 after disbursing half.
Before the new loan was announced, Ukraine had seemed headed toward default with $11 billion in debt coming due within two years.
The IMF Executive Board decided to open a new line of credit worth $3.9 billion, aid that could help prop up Ukraine as it goes on a war footing. Tensions with Russia have recently ratcheted up, especially after Russian ships opened fire on and seized three Ukrainian naval vessels late last month.
The IMF has been demanding that Ukraine create an independent anticorruption court to crack down on the theft of budget money — which partly consists of Western aid — by government insiders. It is also urging the government to raise natural gas prices.
The government has said an anticorruption court will be up and running later this year. (om/nyt/ez)