Ukraine gets first of its IMF bailout aid

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Ukraine gets first of its IMF bailout aid

Ukraine gets first of its IMF bailout aid
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Ukraine has been given the first installment of its bailout loan from the International Monetary Fund.

The central bank in Kyiv confirmed the equivalent of 2.3 billion euros had been received.

Around of a third of the money went to the bank’s foreign currency reserves and the rest to the state budget, it said.

It is not clear how much will be used to pay part of what Ukraine owes for supplies of Russian gas.

Altogether Kyiv has been promised 12.2 billion euros by the IMF, but there are conditions to the aid package, including a huge hike in the price Ukrainians must pay domestically for energy.

Economic downturn

Ukraine’s economy will slide deeper into recession this year despite an IMF aid deal as a pro-Russian rebellion cripples activity in the industrial east and scares off foreign investors, economists forecast in a poll carried out by Reuters.

The economists predicted the IMF money would do little more than stabilise the hryvnia currency, which has fallen by almost third against the dollar this year.

The said most of the IMF loan would be used to repay foreign debt rather than rebuild reserves.

“At the moment there is no hope for a quick resolution of the situation in the east. So the prospect of worsening GDP and industrial output forecasts will continue,” said Anatoly Baronin of analytical group Da Vinci.

GDP 4.3 percent decline

In the survey of 12 banks and brokerages taken over the last week, the median forecast was for GDP (gross domestic product) to fall 4.3 percent this year.

That marked a deepening pessimism from last month’s Reuters poll which predicted the economy would shrink 3.2 percent in 2014, following a flat performance last year and minimal growth of 0.2 percent in 2012.

Ukraine’s economy has already been weakened by years of mismanagement and corruption. But the country now faces the threat of civil war as Kiev forces try to crush separatists in the largely Russian-speaking east, while fears are rising that plans for a presidential election on May 25 could be derailed.

with Reuters