EXCLUSIVE World Bank pushes approval of $350m loan to Ukraine within days – sources

A participant stands near a World Bank logo at the International Monetary Fund – World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia October 12, 2018. REUTERS/Johannes P. Christo

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WASHINGTON, March 1 (Reuters) – The World Bank is pushing for “accelerated” approval of an additional $350 million loan to Ukraine within days to provide emergency cash for its defense efforts against the Russian invasion, it said people familiar with the plans .

Expanding an existing loan would provide Ukraine with “budget support” without restrictions on how President Volodymyr Zelenskyy’s government can spend, the sources told Reuters.

One of the sources said the loan could be ready for board consideration as early as later this week, while another said it could also be next week, with disbursements taking place within days of approval.

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They said the plan had strong support on the World Bank’s 25-member Executive Board, despite objections from the Russian Executive Director. The United States and Western allies control an overwhelming majority of the development lender’s voting shares.

The move to quickly send cash to Ukraine has gained urgency at the World Bank since Russia invaded the country last week. World Bank President David Malpass told Zelenskiy in Munich on February 19 that the organization was preparing to disburse $350 million by the end of March, followed by other funding projects. Continue reading

A World Bank spokesman declined to provide details of the plan, but said: “We are currently preparing a package of fast-paying financing for Ukraine, which we hope to present to our board of directors for consideration in the coming days.”

The sources described the payout as a “top-up” that would effectively double $350 million Development Loan Granted to Ukraine on December 17 to support reforms promoting more competitive business, land reforms and access to credit for small farmers.

The plan would entail World Bank lending to Ukraine in the past year alone over $1.5 billionincluding loans for COVID-19 response and immunizations, power grid improvements and education.

It would not increase Ukraine’s political commitments, and by expanding an existing loan, the bank can move to board approval much more quickly than if it started an entirely new lending process with new program targets, the sources said. Some of the funds for the supplement can be contributed by bilateral donor countries.

As the Russian invading force in Ukraine grows in size, one of the sources said the $350 million disbursement could be withheld if Zelenskyy’s government is ousted before the transfer is ready.

“If there are concerns that the funds are being misused on the day of disbursement, they will not be disbursed,” one of the sources said. “If the bank is not sure that the funds will go to the Ukrainian government, they will not be paid out until the very last moment.”

Since the start of the COVID-19 pandemic in early 2020, the World Bank has provided loans totaling US$2.3 billion for budget support, health care, immunization and investment projects.

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Reporting by David Lawder; Adaptation by Leslie Adler

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