The visit to Kyiv of World Bank Director for Ukraine and Belarus Luca Barbone has ended. He was here to familiarize himself with how Ukraine is meeting the guidelines of the Program Systemic Loan, PSL, and preparing for Innovation Ideas Day on June 8- 9. Most of all, however, he was interested in the current political doings in Ukraine.
During his visit, Mr. Barbone met with the WB manager from Ukraine and interim First Vice Prime Minister Yuri Yekhanurov, National Bank of Ukraine Governor Volodymyr Stelmakh, and members of the WB contact group representing public organizations.
Obviously, our creditors are eyeing developments in Ukraine with more than idle interest with a view to issuing new and recovering old loans. Recall that since the World Bank began its cooperation with Ukraine the total amount of its loans has reached $2.02 billion. Interestingly, of this total, Ukraine has not received $630 million, which was frozen in 2000 in the wake of Ukraine’s problems with the IMF, and this significantly increased of our government’s interest in the visiting WB top executive. Moreover, in line with its new assistance strategy toward Ukraine, the World Bank is to release $1.8 billion in loans, given successful implementation by Kyiv of the agreed target indicators for effective management. The $750 million PSL is a core element in this new strategy, with the first tranche to have been released in May. However, in view of the recent resignation of the Ukrainian government, the World Bank put it on hold.
Nor has any decision been made on whether to extend the last WB tranche to reform of Ukraine’s coal sector, for the Ukrainians were not simply prepared for a dialogue with the WB. Stressing the bank’s “readiness to release the tranche,” First Vice Premier Yuri Yekhanurov still declared that to prepare for the final talks with the WB the government needs a time-out until next week. He also said the government is doing its best to receive another WB loan to implement the Ukraine: Development Via the Internet project, noting that President Kuchma has personally contacted WB President James Wolfensohn about this project.
Still, the World Bank’s Program Systemic Loan seems to be the most lucrative for Ukraine, especially since, if the present government fails to get it now, Ukraine will be able to receive it only next May, Mr. Yekhanurov pointed out. Then the vice premier played his trump card, telling the World Bank that if the loan is released to the old government, the new one will be forced to implement the action plan made by its predecessor, stressing that “the program sets the course for Ukraine for the next three years and its contents will be difficult to change.” Indeed, release of the PSL depends on the speed with which the action plan developed by the Yushchenko government will be implemented. But will the new government follow in its predecessor’s footsteps? And will the parliament be willing to ratify a loan agreement for the government this same parliament has recently dissolved?
