Still A Distance To Credit
The Board of the World Bank adopted a strategy of aid to Ukraine envisioning $1.8 billion worth of credit to be provided in tranches over the next three years. Actual World Bank financial assistance will depend on economic reform in this country, to which end special criteria have been worked out (12 in all) by which to assess the situation. This aid will be effected mainly by using a number of loans under program system credits.
The bulk of the loans will be made available only when the credit process follows the basic scenario, meaning that Ukraine will first of all have to renew relationships with IMF and reschedule its liabilities to the Paris Club. Ukraine is still in the aid mode, even according to the pessimistic scenario. Although the World Bank acknowledges a degree of progress in reform, not enough to switch to the next, higher level. Financial aid under the two scenarios have certain distinctions. Under the basic scenario, Ukraine could receive loans of $531 million during the first year or $181 million under the pessimistic one, $735 million or $175 the next year. If the pessimistic scenarios is played out, Ukraine will receive a total of $461 million in 2001-03.
When developing its new strategy, World Bank was sufficiently critical of past achievements. Despite undeniable success in rebuilding the state machine under such difficult conditions, in terms of its economy Ukraine has wasted the decade since it proclaimed independence, says chief World Bank missionary in Ukraine Gregory Jedrzeiczak, adding, “We believe that more could have been accomplished, and this is true of both Ukraine and the World Bank.” Thus, reform in Ukraine should be assessed proceeding from specific actions, rather than documents composed by the government, he says. He also sees the World Bank’s previous strategy of providing credit for the adjustment of a given sector, with reform in other sectors coming to a standstill, as a serious shortcoming. From now on such matters will be resolved in a complex manner.
Du я san Vujovic, program credit coordinator, insists that a wrong concept has taken shape recently, to the effect that World Bank money is provided equally regularly, regardless of what happens with economic reform in Ukraine. To correct this misconception, all World Bank tranches over the next three years will be closely interrelated with Ukraine’s implementation of certain indices. Five of the World Bank’s twelve requirements have been complied with to date, Mr. Vujovic stressed. He also specified the World Bank guidelines in financially aiding Ukraine: overall fiscal discipline (including a solution to the nonpayment problem), creation of a favorable legal framework for Ukrainian business, measures to secure property rights, accountability and transparency of the fiscal policy, and better management in the social sphere.
World Bank officials in Ukraine announced that World Bank President James Wolfenson will visit Kyiv October 4-6 at President Kuchma’s invitation to familiarize himself with the status of economic reform and discuss further cooperation with the World Bank. The World Bank President’s last visit was in 1995.
