Announcement of First World Bank Loan to Ukraine Supports Reforms on June 8, 1993

FOR IMMEDIATE RELEASE *World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 93/102 Contact: Peter Riddleberger Tel. (202) 473-1786 FIRST WORLD BANK LOAN TO UKRAINE SUPPORTS REFORMS WASHINGTON, June 8, 1993--Ukraine will breathe new life into to its economy through a program designed to build government institutions capable of carrying out key economic reforms. The World Bank today approved a $27 million loan to support the program. The sum marks the first Bank loan to Ukraine since the country joined the institution in September 1992. Ukraine, the "breadbasket" of the former Soviet Union (FSU), holds a wealth of economic promise. This Central European nation of 52 million people boasts Europe's second-largest land mass, and, after Russia, claims the largest population among the countries of the FSU. But an acute shortage of professionals and institutions capable of guiding the country out of 70 years of central planning is preventing the country from tapping into its potential. During the World Bank-financed program, Ukraine will receive expert advisory services, training and equipment to aid the reform effort in three areas where the government says it needs the most help: promoting private-sector development, including privatizing state-owned firms, building up a private banking system, and managing public finances. The project will encourage private-sector growth in cities and "oblasts," or regions. Kharkiv and five other cities will receive help in auctioning small ventures and simplifying business regulations. Also, the government's efforts at breaking up monopolies will receive support and pilot privatization programs will be launched for five large enterprises. Basic banking services will receive assistance under the project. Help will focus on modernizing the payments system, reforming bank accounting systems, and strengthening commercial banks. The project will also help the Ukranian government improve its management of public finances, especially in the ministries of finance, statistics and the economy. Assistance will focus on putting a treasury system in place, modernizing the tax administration and statistical systems, and beefing up capacity for economic analysis. The World Bank loan is for 17 years, with a five-year grace period, at the institution's standard variable interest rate, currently 7.43 percent.