World Bank approves $400 million loan for Ukraine
The World Bank's Board of Executive Directors has approved the Programmatic Financial Rehabilitation Development Policy Loan 1 (PFRL 1) for Ukraine in the amount of $400 million.
The decision was taken at a meeting in Washington on September 17, the World Bank said in a press release.
"Key elements of reforms supported by PFRL 1 include the creation of a transparent process to ensure that banks are recapitalized with private funding and where that is not possible, recapitalized or resolved with public resources at the lowest possible cost. The reforms also included the recapitalization of three systemically important banks following this process," reads the document.
In addition, PFRL 1 supports the approval of legal amendments that will make it faster to deal with vulnerable banks and will lower the cost to tax payers. The loan strengthens operations and the design of emergency funding arrangements for the Deposit Guarantee Fund – which insures the savings of depositors.
PFRL 1 is the first of two development policy loans designed to address the impact of the financial sector crisis in Ukraine. The first loan aims to restore the stability of the core banking sector in the face of the ongoing crisis, while PFRL 2 will be aimed at restructuring the sector and enhancing the legal and regulatory framework to make it more resilient to future crisis.