Announcement of World Bank Releases United States (U.S.) Sixty Million Dollars to Ukraine Under Financial Sector Adjustment Loan on February 8, 2001

World Bank Releases US$60 Million To Ukraine Under Financial Sector Adjustment Loan Contact Person: Dmitro Derkatch (380 44) 490 66 71 Email: Dderkatch@worldbank.org In Washington: Mapi Buitano (202) 473 8417 Email: Mbuitano@worldbank.org WASHINGTON, February 8, 2001--The World Bank today released US$60 million as the third and final tranche of the Financial Sector Adjustment Loan (FSAL) to Ukraine. The release has been triggered by the fulfillment of the conditions of the loan, including the adoption of a law to regulate banking activities. The FSAL was approved in September 1998 for US$300 million. The first two tranches of US$100 million each were released in September 1998, and September 1999. The remaining amount was restructured into a smaller tranche of $60 million, which was released today. "The World Bank intends to continue its support for Ukraine's financial sector," said Luca Barbone, World Bank Country Director for Ukraine and Belarus."Future actions by the Bank, including our work under the planned Programmatic Adjustment Loan, is expected to consolidate the achievements of the FSAL and deepen and extend the financial sector development agenda". The conditionality of the FSAL has contributed significantly to progress in different areas of Ukraine's financial sector, including: · A modern legal structure for banking based on the enactment of the Law on the National Bank of Ukraine (approved in May 1999) and the new Law on Banks and Banking Activity (approved in December 2000); · Reform of supervision practices and organization of the National Bank of Ukraine, a revision of its prudential regulation requirements and procedures, including the initiation of work to ensure compliance with the 25 Basel Core Principles, enforcement of a modern system of loan-loss provisioning and introduction of higher capital requirements; · Establishment of clear accounting and other diagnostic information regarding the financial situation in Ukraine's largest banks; and · The definition of a clear legal authority and procedural arrangements for resolution of problem banks.