IMF Sets Tough New Ukraine Loan Demands

The International Monetary Fund said on Friday it will only release a new tranche payment to Ukraine once parliament approves a long-stalled pension system overhaul and land privatization legislation.

The IMF said after completing its latest mission to the war-torn country that Ukraine’s economy was continuing to recover from a dire recession and was on course to expand by more than 2% of gross domestic product this year, AFP reported.

Ukraine is using a $17.5-billion IMF lifeline to recover from crises sparked by a Russian-backed war in the separatist industrial east that began in April 2014 and has claimed more than 10,000 lives.

The loss of industries in the war zone and flight of foreign investors saw the former Soviet republic’s economy shrink by 17% in 2014-2015.

But the IMF now expects Ukraine to achieve sustainable growth by cutting the expense of a pension system that accounts for 9% of gross domestic product and supports about one third of the population.

It also wants land sales approved by a parliament in which the government holds only a slim ruling majority and where opposition to the proposal is strong. The IMF said its “discussions focused on the pending pension and land reform and on measures to speed up the privatization process”.

“Securing parliamentary approval of these draft laws will be needed to pave the way for the completion of the fourth review,” it said in a statement.

Ukraine has so far received only $1 billion of the $4.5 billion it hopes to see from the IMF this year.