. Last Updated: 07/27/2016

IMF Delays Ukraine Loan Tranche Approval

KIEV -- The International Monetary Fund has decided to postpone approval of a $350 million loan installment for Ukraine because the government failed to meet economic reform criteria, an IMF official said Thursday.


The IMF will probably vote on the fourth tranche of a $1.5 billion standby loan in March or April, instead of this month, resident representative Graeme Justice said.


A mission will visit Kiev this month to decide whether to complete a review required ahead of the loan's approval. The loan is divided into five tranches altogether.


Russia is currently receiving the final monthly tranches of a $6.5 billion loan agreed last March. Tightly monitored compliance with a litany of macroeconomic objectives was a condition of the one-year deal, with the IMF reserving the right to withhold tranches if its criteria were not met.


A new three-year, $9 billion to $12 billion loan for Russia is expected to be agreed within a month.


Ukraine started slipping from its reform program in July, when the government bowed to pressure from industry and issued cheap credits to the sector. The move sent the karbovanets currency diving and inflation skyrocketing.


But Justice said the Finance Ministry and Central Bank had been fighting hard ever since to hit financial indicators envisaged in the program backing the standby loan.


"All in all we think their performance was quite good. As far as we are concerned there wasn't a serious break or delay in the program," he said.


"The fourth tranche is still on, and if they meet the various conditions, then hopefully they will get it."


A delay of a few months for the tranche should not be too painful for Ukraine, he said.