WASHINGTON, May 21 – Ukraine and the International Monetary Fund on Thursday reached a staff-level agreement on $5 billion loan that will help the country overcome devastating impact of the coronavirus pandemic.

An IMF staff team led by Ivanna Vladkova Hollar concluded remote discussions with the Ukrainian authorities to reach the agreement on economic policies for a new 18-month Stand-By Arrangement (SBA).

“The new SBA, with a requested access of SDR 3.6 billion (equivalent to US$5 billion), aims to provide balance of payments and budget support to help the authorities address the effects of the COVID-19 shock, while consolidating achievements to date, and moving forward on important structural reforms to reduce key vulnerabilities,” Vladkova Hollar said in a statement posted on Thursday.

“This will ensure that Ukraine is well-poised to return to growth and resume broader reform efforts when the crisis ends,” Vladkova Hollar said. “The arrangement is also expected to catalyze additional bilateral and multilateral financial support.”

The agreement has to be approved by the IMF Executive Board, which is expected to meet within the next several weeks.

Ukraine need to get the first installment of the loan before the end of May to avoid potential default on foreign debts as the government’s coffers are depleted by the coronavirus pandemic.

President Volodymyr Zelenskiy on Wednesday expressed hope that the country can get the first installment in May.

Ukraine may be able to get the first installment of the loan, or about $1.9 billion, before the end of May, Finance Minister Serhiy Marchenko said.

The developments comes a week after Ukraine’s parliament passed a banking reform bill, the key remaining obstacle on the way to the deal with the IMF.

The new legislation prevents the former owners of insolvent banks from regaining their assets. It is seen mainly as being aimed against the interests of Ihor Kolomoisky, a tycoon and an early backer of Zelenskiy’s 2019 election campaign.

Kolomoisky used to co-own Ukraine’s largest lender, PrivatBank, until it was nationalized in 2016. He has waged a long legal battle against the government to either recover it back or receive compensation. (tl/ez)