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. Last Updated: 07/27/2016

World Bank to Loan $500 Million to Kiev

WASHINGTON -- The World Bank on Thursday announced a $500 million loan to Ukraine, praising policies favorable to private enterprise initiated by President Leonid Kuchma since he took office in July.


"The government under President Kuchma has demonstrated strong commitments to reform by implementing a series of difficult and far-reaching measures," the announcement said.


Under the bank's charter, loans are granted on economic and not political grounds. Kuchma's measures, the bank said, include lifting most price controls, unifying currency exchange rates, eliminating most quotas on exports, reducing subsidies and setting up a safety net for people most in need.


Kuchma said last month that after Ukraine agreed to dismantle its nuclear weapons and to reform its economy, Western countries must come through with more aid. The World Bank, with 178 member countries including Ukraine, is the world's biggest single source of aid.


The loan is designed to help get Ukraine's economy growing again, after sharp declines that followed the collapse of the Soviet Union.


Ukraine is the most populous of the former Soviet republics after Russia, with nearly 52 million citizens. The World Bank estimates the average Ukrainian's income at the equivalent of $1,190 last year, down from $2,500 in 1990.


Ukraine already has begun receiving $365 million from the International Monetary Fund, the bank's sister organization. Actual disbursement of both loans depends on Kuchma's government keeping to agreed conditions.


The National Bank of Ukraine will auction the foreign currency that the bank lends -- dollars, marks, or other currencies depending on need. The equivalent in local currency -- the karbovanets -- will be used by the government.


Ukraine has been a member of the bank since September 1992 but has had only one $27 million loan from it, 18 months ago. Additional loans are foreseen before the end of June 1995. This one is repayable in 17 years.