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​World Bank to lend Ukraine $3bn

Published time: March 11, 2014 10:54
Alex Wong / Getty Images / AFP

Alex Wong / Getty Images / AFP

The World Bank is ready to grant almost bankrupt Ukraine a loan of up to $3 billion this year to support reforms and infrastructure projects.

The Washington-based organization already has several projects in Ukraine aimed at reducing poverty.

Around $2 billion will be allocated to the ongoing projects. The other $1 billion would go directly to the government on condition it implements economic reforms to fix the financial mess, Reuters says.

We are committed to supporting the people of Ukraine in these difficult times and very much hope that the situation in the country stabilizes soon,said World Bank President Jim Yong Kim.

We are moving forward with our pipeline of projects and aim to support the government to undertake the reforms badly needed to put the economy on a path to sustainability”, he said.

The terms of the loan have not been announced, however the bank says priority is to be given “to restoring macroeconomic stability, strengthening the banking sector, reforming the energy sector, seriously tackling corruption and improving accountability, enhancing the investment climate and better targeting social assistance towards the poor and the vulnerable.”

The $3 billion loan may become additional help to the ongoing investment and guarantee program of about $3.7 billion. In particular the World Bank supports the improvement of basic public service delivery in areas such as water supply, sanitation, power and roads, and supports the private sector.

However Timur Nigmatullin, the Investcafe analyst, is sure Ukraine needs a much larger sum to get out of the crisis.

"In order to solve the economic problems of Ukraine, needs not less than $15-25 billion, probably nearer to $35 billion … Without external help we will see a Ukrainian default within the next few months," Nigmatullin said.

The Vice-President of the European Commission Olli Rehn said, at a euro group meeting on Monday evening, the EU can allocate up to $2.2 billion (1.6 billion euro) of direct financial help to Ukraine,

However, Rehn emphasized that at first Ukraine has to sign a contract with the International Monetary Fund (IMF) and undertake a commitment to carry out economic reforms.

Comments (17)

 

Johnny Blaze 12.03.2014 21:58

I want three billion dollars. I promise to serve the people with it. I am an honest man like Yatsenyuk. Pretty please. I think I have earned it.

 

renee.bernier 12.03.2014 00:56

the average citizen of Ukraine will suffer from lower pensions and severe austerity cuts, as a result of IMF 'loans' which they cannot afford.

 

Regula 12.03.2014 00:32

From the democracy trap into the interest-loan trap. Soothing melody of macroeconomic restructuring, economic reforms, zero corruption etc. as if this was guaranteed to solve Ukraine's problems. The only upside is that the World Bank appears to be aware that the poor will need "better targeting [of] social assistance towards the poor and the vulnerable" - which may well mean over half of the population.What neither the World Bank nor the IMF appear to have is an example where these measures actually resulted in recovery and success of the nation thereafter.The contract shutting the trap - Ukraine happily caught.

View all comments (17)
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