Ukraine to receive a loan of USD 500 ml from World Bank for financial sector reforms

Today, on September 16, 2015, the Ukrainian Minister of Finance Nataliya Yaresko and Qimiao Fan, the Country Director of the World Bank for Ukraine, Belarus and Moldova, Europe and Central Asia, have signed an agreement on a loan for Ukraine amounting USD 500 ml. The loan is a part of the Second Programme Loan for the development policy of the Ukrainian financial sector.

This loan is an element of a broader programme of cooperation between Ukraine and international partners totaling USD 7,2 bn. The loan became possible thanks to the continued cooperation between Ukraine and the International Monetary Fund under the Extended Financing Facility (EFF) agreed in March 2015.

The loan was endorsed by the Directors’ Board of the World Bank on September 15, 2015.

«This loan is one more step to enhance the financial stability of our country and to recover its economy. It will help us return to economic growth, improving employment and increasing the social standards for our citizens», Minister of Finance Nataliya Yaresko said.

To receive this loan, Ukraine has been pursuing structural reforms aimed to have the financial sector back on track and to strengthen legal and institutional basis for the banking system. To comply with the loan terms, Ukraine founded the Council for Financial Stability, adopted the Law on the Deposit Guarantee Fund elaborated by the Ministry of Finance to enhance the protection of citizens’ savings, conducted a thorough study of the banking sector and provided additional capital to the banks as well as closed insolvent banks to recover the banking system as well as adopted legislation on the control and liability of persons affiliated with banks which is aimed to fight corruption and to regain the trust of citizens to the banking system.

Thus, this loan agreement serves as a proof that Ukraine does have positive results of its reforms which are acknowledged by the World Bank and international community.

Key facts on the loan
 

· This is the second project of the World Bank meant to support reforms in the financial sector. The first loan was granted in September 2014;
· The interest rate for the loan is only approx. 1% p.a. which makes it possible to replace the current liabilities which are served at the interest rate of approx. 8%;
· The maturity period for the loan is 17 years, the first 6 years are a grace period;
· Within several days the loan will be transferred to the state budget as a single payment.