The World Bank's Board of Executive Directors on June 26 approved a US$350 million First Economic Recovery Development Policy Loan (DPL) for Ukraine in support of reforms that are critical to economic recovery and to help mitigate the impact of the COVID-19 pandemic.

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"The key reforms supported by the DPL include: (i) strengthening land and credit markets by creating a transparent and efficient market for agricultural land and resolving non-performing loans in state owned banks; (ii) fostering de-monopolization and anti-corruption institutions including by restructuring the gas sector; and (iii) bolstering the social safety net for the vulnerable elderly population to cushion the impact of the COVID-19 pandemic," the World Bank's press service said on June 26.

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"The COVID-19 pandemic is resulting in a sharp economic downturn that is hurting the incomes of ordinary Ukrainians and small businesses, and straining the government's budget. This development policy loan provides US$350 million to support budget expenditures at a difficult time," said Arup Banerji, incoming World Bank Country Director for Belarus, Moldova, and Ukraine.

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Restructuring the gas sector by creating an independent gas transmission system operator is already helping safeguard Ukraine's gas transit revenues. Strengthening Ukraine's anti-corruption institutions is intended to help establish a level playing field in the private sector and bolster investor confidence. Resolving non-performing loans in state-owned banks will help increase the efficiency and flow of credit to Ukrainian firms, the press service said.

"Ukraine has taken a historic first step towards establishing a transparent and efficient market for agricultural land and unlocking investment in agriculture with the approval of the land turnover law supported by this development policy loan," said Faruk Khan, World Bank Lead Economist for Belarus, Moldova, and Ukraine.

According to Khan, it will be important to approve and implement additional legislation to strengthen land management, streamline land transfer procedures, enhance access to finance for small farmers, and widen participation in the market to ensure that the land market will be transparent and efficient.

"This DPL is the first of two planned operations, with the second DPL expected to support the additional important land reform legislation and further strengthen pension benefits for the elderly population," the press service added.