The World Bank has offered the Ukraine another $500 million credit line. This money is to be spent on the development of the country’s financial sector. In August Kiev received a similar loan from the World Bank; to be spent on the optimization of economic conditions in the country. Whether this loan did what it said on the tin is, for the moment, unclear.
The financial aid offered to the Ukraine is part of a $17.5 billion deal agreed in spring. Kiev has received two traches already and the third could be in the state coffers by October. The $500 million is part of a set of loans totaling billions and has a concrete purpose. Right now it’s hard to say how effective these extra loans will be since the Ukrainian economy is still in a difficult situation. Data for Q2 of the country’s GDP is down by 14.7% YOY, unemployment from January to March stood at 10% and August inflation stood at 52.8% with the rate for the year at 42.2%.The M2 money pile is gradually decreasing, although foreign currency reserves have been on the rise recently thanks to the external credit the country has been receiving. However, Ukraine’s debt level is increasing. The country already owes its creditors $19 billion and debt restructuring negotiations are underway.
In order to assess the effectiveness of the World Bank’s aid package, more time must pass since what’s going on in the Ukraine right now is hardly transparent and quite chaotic.