News Brief No. NEWS BRIEF Number 96/16

News Brief: Donors Pledge Support for Ukraine's Reforms

December 17, 1996

Donors met in Washington today on Ukraine and confirmed US$3.5 billion in financial support to help meet its external financing requirements for 1997. About US$1.1 billion will be provided by the IMF (extended Fund facility); US$1 billion by the World Bank (project and adjustment operations); and the remainder by other multinational organizations and donor nations. Contributions will be in the form of disbursements of already committed trade and project financing, and in the form of new financing.

The meeting was hosted by the International Monetary Fund and was attended by representatives of the Ukrainian Government, the World Bank, the EBRD, the European Commission, and 14 donor nations. It was a follow-up to the Consultative Group (CG) meeting on Ukraine that was held in Paris on October 24-25, 1996.

The financing supports a wide-ranging package of macroeconomic and structural reforms that Ukraine intends to implement in 1997. The program, which includes a realistic and prudent budget, builds on the progress made in 1995 and 1996 in stabilizing and reforming the economy. The new program aims to promote sustained growth and to contain inflation. Measures under the program include: reforming the tax system by widening the tax base and lowering tax rates; reforming the pension system and improving support for the most vulnerable groups of the population; strengthening the banking system and monetary policy; deepening the process of privatization; further liberalizing the trade system; and undertaking further deregulation to foster private sector development.

Donors noted that the components of the program were interdependent and that the program would not succeed if implemented piecemeal. They therefore urged Ukraine to carry out the adjustment program in its entirety as soon as possible to avoid delays in the financing pledged at the meeting.