IMF may cut aid to Ukraine over corruption

The International Monetary Fund (IMF) has threatened to cut financial aid to Ukraine because the country has shown little progress in tackling corruption.

"Without a substantial new effort to invigorate governance reforms and fight corruption, it is hard to see how the IMF-supported program can continue and be successful," Christine Lagarde, the IMF managing director, said in a statement on Wednesday.

Lagarde said Ukraine has done little in “reducing the influence of vested interests in policymaking,” adding that she is concerned about the slow progress the country has made in improving governance and fighting corruption.

"It is vital that Ukraine's leadership acts now to put the country back on a promising path of reform," said the Washington-based chief of the IMF.

Ukraine is heavily dependent on foreign assistance as the country has experienced since April 2014 the shockwaves of a conflict in its eastern territories that has pitted pro-Russians against the pro-Western government in Kiev.

The country now waits for a new installment of funding from the IMF which has been delayed since October 2015 amid disputes over the budget. The top international lender agreed in March the same year, under direct influence of the United States as its main shareholder, to provide USD 17.5 billion to Ukraine under a four-year aid program. The loan, however, came under the condition that Ukraine delivers drastic reforms. The IMF has disbursed USD 6.7 billion to date but future outlook of such installments remains uncertain.

The strongly-worded statement by the IMF came a week after Ukrainian Economy Minister Aivaras Abromavicius resigned due to what he called consistent efforts by colleagues in the government to block his reforms. Lagarde had said last week that the reasons for resignation of Abromavicius were "troubling."

“Ukraine risks a return to the pattern of failed economic policies that has plagued its recent history,” Lagarde said.

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