Last Tranche Is the Hardest

The World Bank’s financial sector mission has completed work in Kyiv. After two WB tranches of $40 million and $30 million, respectively, provided in support of the Ukrainian mining industry, this country expects the last tranche of $100 million to help restructure the nation’s financial sector. Getting it will not be easy; every time leaving Ukraine, WB experts have pointed to the nonfulfillment of the requirements stipulated for the loan. This last visit is no exception: three requirements still are to be met.

Of the latter, main emphasis is on enacting the bills On Banks and Banking (in its new wording) and On Guaranteed Deposits. The World Bank also insists on the Savings Bank’s restructuring. The experts voiced their serious concern over the SB’s recent loans to the energy sector. Paul Siegelbaum, head of the WB department for the development of the financial and private sector, (far left in the photo) says that, on the whole, they are not against credits being given to the energy sector, but that this should be done using budget means and under conditions of absolute transparency.

WB consultant Alan Roe considers that the bank’s strategy should rely on providing credit to medium and small business, as well as to private individuals. Loans such as those given Ukraine’s energy sector are, in his opinion, adding to nonpayment risk. Mr. Siegelbaum stressed that the World Bank would want to see a greater degree of preparedness on the part of the Savings Bank in carrying out its modernization and restructuring program.

Even though the financial sector restructuring project’s deadline is December 31, 2000 (previously extended from December 30, 1999 to June 30, 2000), Mr. Siegelbaum considers that there is enough time left to resolve the final tranche issue. Unlike previous WB missions to Ukraine, this one passed a sentence that did not sound final. Mr. Siegelbaum does not rule out the possibility of Ukraine getting the final tranche before the end of the year, even if partially, given certain conditions.