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17 March, 1999
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IMF management recommends to resume EFF lending program with Ukraine
The International Monetary Fund management expressed satisfaction at Ukraine's progress on fiscal and structural reforms in its statement issued on March 16, 1999, and said it was ready to recommend resuming an EFF lending program with Ukraine. The IMF statement informed the fund's executive board was scheduled to meet before the end of March to consider new tranches for Ukraine. The IMF approved a $2.25 billion loan for Ukraine under the Extended Fund Facility program on September 4, 1998, but so far disbursed only $300,000. Ukraine had made progress in key areas, taking steps to cut its budget deficit to 1.0 percent of GDP, to adopt new policies on privatization, deregulation and demonopolization, adjust prices for communal services, and strengthen reforms in the farm and energy sectors, the statement went on. Once the decision is taken by the IMF Executive Board, Ukraine expects to receive about $158 million from the IMF and $200 million from the World Bank.
The following is the full text of the International Monetary Fund's statement regarding financial aid for Ukraine:
IMF to Consider Resumption of Financial Assistance for Ukraine
On September 4, 1998, the International Monetary Fund (IMF) approved a three-year extended arrangement for Ukraine, equivalent to US$2.25 billion, to support the government's 1998-2001 economic program. Of the total, US$0.3 billion has already been disbursed. Further disbursements were postponed because cash revenues fell short of expectations, fiscal prospects for 1999 remained unclear, and some structural reforms were behind schedule.
Since then, Ukraine has made progress in the fiscal and structural areas. The authorities have embarked upon a major fiscal adjustment effort, aimed at reducing the overall cash deficit from the equivalent of 2.7 percent of GDP in 1998 to 1.0 percent in 1999. Cash revenue performance and expenditure controls have improved and expenditures have been maintained within the government's targets. Significant reforms have also been implemented in the areas of restructuring of government, privatization, deregulation, demonopolization, and improving cost recovery through adjusting the prices of communal services. Steps are also underway to strengthen reform in the agriculture and energy sectors.
In view of these steps, IMF management has decided to propose to the Executive Board to resume financial assistance for Ukraine. An Executive Board meeting will be scheduled before the end of March to consider this issue.
Ukraine Paid Its Eurobond Coupon on Time
On March 17, 1999 the Finance Ministry in Kyiv said that Ukraine paid on time the first 73.7 million euro ($81.07 million) coupon on its two-year Eurobond, due on this day. The payment was made from National Bank of Ukraine’s reserves. Bank chairman Viktor Yushchenko said on March 15, that the current level of NBU’s reserves were in line with IMF targets. The Finance Ministry must pay a total $1.17 billion to service Ukraine’s foreign debts this year. Ukraine has paid all its foreign debt so far this year, once again confirming its reputation as a good and reliable payer. 500 million euros of Eurobonds, maturing March 17, 2000, with a coupon of 14.75 percent were sold by the Ukrainian government in March 1998.
Statement of the Foreign Ministry of Ukraine on Nato Enlargement
On March 12, 1999, during the solemn ceremony in the USA, the documents on accession of Poland, Hungary and the Czech Republic to NATO were submitted by their foreign ministers to the US Secretary of State.
The Government of Ukraine respects and welcomes the sovereign choice of friendly Poland, Hungary and the Czech Republic as an evident demonstration of the right of any nation to decide on the means to ensure its own security.
We believe that an open character of new states accession to NATO will become a guarantee of strengthening security and stability in Europe and in the Euro-Atlantic region as a whole, and for further affirmation of the ideals of democracy and freedom on our continent.