Washington--The International Monetary Fund on Tuesday defended its risky new $17.5 billion loan to Ukraine after eight failed programs with the country, stressing the government was committed to discipline and reform.
IMF first deputy managing director David Lipton said that a real window for progress has opened "for the first time" after decades of government mismanagement and corruption.
As recently as 2013, he said, there was no will among Kiev's leaders to undertake the reforms needed to right its economy, especially to address massive corruption.
"Now, Ukraine has the political will, but it has to contend with full-blown economic and financial crisis," Lipton told the Peterson Institute for International Economics in Washington.
Today, he said, "the country has elected leaders who are approaching economic policy making with purpose and commitment."
Lipton was speaking a week before the IMF's spring meetings where members are expected to challenge the Fund management over its second Ukraine program in one year as the country remains mired in a conflict with pro-Moscow separatists.
The strain of the war has emptied the government's coffers and run down its foreign reserves to a bare minimum, putting it on track to default on its huge debt load.
In early March the IMF replaced its admittedly inadequate two-year loan program from 2014 with a four-year, $17.5 billion loan that forms the core of a broader $40 billion bailout of the country.
With another key facet of the program still not in place, a debt restructuring that needs to save the government another $15 billion, the IMF admitted that the risks to its program are "exceptionally high".
"We are already hearing from critics who question the wisdom of supposedly putting Fund resources at risk in such an uncertain situation," Lipton said.
"There is only one answer. The Fund's job is to support members in crisis provided they are trying to put themselves right."
AFP
