May 14, 2020 / 10:20 PM / 22 days ago

Ukraine expects first IMF loan tranche in week or two: presidential official

KIEV (Reuters) - Ukraine expects to receive the first loan tranche from a new International Monetary Fund deal within a week or two though the total size of the programme is still being finalised, a presidential official told Reuters on Thursday.

FILE PHOTO: The logo of the International Monetary Fund (IMF) is seen during a news conference in Santiago, Chile, July 23, 2019. REUTERS/Rodrigo Garrido

Parliament passed a banking bill on Wednesday, clearing the last hurdle for a new IMF deal to support Ukraine’s economy as it slides into a recession caused by the coronavirus pandemic.

Yulia Kovaliv, the deputy chief of President Volodymyr Zelenskiy’s office, said by phone that the bill’s passage and other steps were “clear evidence that there is a big commitment to proceed with the reforms” in Ukraine.

Prime Minister Denys Shmygal’s government previously said it expected a $5 billion IMF deal but Kovaliv said the exact figures and a timeline for disbursing the loans would be finalised next week.

The banking bill prevents the former owners of insolvent banks from regaining their assets. It is seen mainly as being aimed against the interests of Ihor Kolomoisky, who used to own Ukraine’s biggest lender, PrivatBank.

PrivatBank was nationalised in 2016 amid allegations, denied by Kolomoisky, that shady lending practices had left a $5.5 billion hole in its finances. He has fought a long legal battle against the government to either win it back or receive compensation.

The bill’s passage had looked uncertain as lawmakers, including some who used to work for Kolomoisky, submitted more than 16,000 amendments. President Zelenskiy’s Servant of the People party retaliated by changing parliamentary voting rules to get the bill across the line.

Lawmakers opposing the reform are expected to try to block Zelenskiy from signing the bill into law by submitting legislation forbidding him from doing so. An opposition party led by former Prime Minister Yulia Tymoshenko also threatened to challenge the law at the Constitutional Court.

Kovaliv played down concerns that the reform could be delayed. She said lawmakers had similarly tried and failed to block a previous bill lifting a ban on the sale of farmland, which had also been a condition for the IMF deal.

“We don’t expect that this is something that could significantly delay the law to be signed and enacted,” she said.

Ukraine has imposed lockdown measures on many businesses since March and its economy is expected to shrink around 5% this year as a result of the pandemic.

There is some cause for optimism. Ukraine for the first time on Thursday recorded more recoveries from the coronavirus than new cases.

But while Kiev has gradually started easing restrictions, Kovaliv said it was premature to try to set a date for lifting the lockdown entirely, saying it depended partly on whether people complied with the lockdown rules still in place.

Reporting by Matthias Williams; editing by Grant McCool

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