International

Ukraine passes laws to unlock $3.2B in foreign aid

Local children holding toy guns stand near the village of Hrabove, eastern Ukraine, Thursday, July 16, 2015. (AP Photo/Mstyslav Chernov)

KIEV: Ukraine’s parliament has passed all the laws needed to receive a new tranche of loans amounting to over $3 billion under an IMF-backed bailout program, Finance Ministry official Artem Shevalev said Thursday.

Ukraine has so far received $5 billion from the International Monetary Fund, out of an overall pledge of $17.5 billion. To get more, it had to implement reforms including legislative changes to the banking system and energy sector.

Parliamentary deputies passed the last of the requisite laws on Thursday. “Thanks to the MPs for being responsible – all currently outstanding IMF and World Bank laws [have been] approved,” Shevalev said in a Facebook post.

The IMF cash is part of a broader $40 billion bailout to shore up Ukraine’s economy, which has been pushed close to bankruptcy by years of economic mismanagement and a conflict with pro-Russian separatists. Ukraine is expected to come up with $15 billion of this by restructuring its sovereign and quasi-sovereign debt.

Shevalev said the laws would help unlock financial aid, including $1.7 billion from the IMF, $1 billion from the World Bank, $300 million from Japan and 200 million euros ($218 million) from Germany.

“These funds will be used to support the budget and foreign currency reserves, that is, to strengthen the hryvnia [currency] and for urgent budgetary needs,” he said.

On top of its battle to get its finances in order, Ukraine also faces the challenge of managing the separatist conflict in the east of the country, where violent clashes continue despite a cease-fire deal.

Parliament Thursday approved a draft law to grant two separatist regions greater autonomy, a step toward meeting the demands of the cease-fire agreement agreed in February. President Petro Poroshenko submitted the bill to parliament under pressure from Western leaders to stick to the peace deal.

“We’ve been talking about these changes for over a year. It’s time to stop talking and get down to business,” Poroshenko told parliament before the vote.

Opponents of the law said it undermined Ukraine’s struggle to keep control of its territory after Crimea was annexed by Russia in March last year.

“Thousands of soldiers are giving their lives on the front line for an independent sovereign state – not for the special status of these territories,” Radical Party leader Oleh Lyashko said, ending his speech with a rendition of the Ukranian national anthem.

If the courts decide the law is constitutional, at least 300 of the 450 parliamentary deputies will need to back the bill in its final reading. The next session will be in the autumn after a summer recess.

 
A version of this article appeared in the print edition of The Daily Star on July 17, 2015, on page 5.

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