March 14 (Bloomberg) -- World Bank President Jim Yong Kim said the Ukrainian government’s resolve to overhaul the economy will help the lender speed up about $3 billion in aid in areas such as health and sanitation.
Kim, who met with Ukrainian Prime Minister Arseniy Yatsenyuk in Washington this week, said it won’t be easy for Ukraine to carry out the changes it has pledged.
“Even in the midst of all these political difficulties, they’re going to do things like remove fuel subsidies,” Kim said on Bloomberg TV’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. “We feel that they’re moving forward, so we’re going to be able to move forward we think fairly quickly, if they continue on that path to being committed to those reforms.”
Yatsenyuk, who is seeking financial aid from Western donors, including $15 billion from the International Monetary Fund, promised “real reforms” to steady an economy beset by a plunging currency and widening budget deficits. The IMF has repeatedly urged the government to narrow the deficit, allow the currency to fluctuate and phase out gas subsidies that account for 7.5 percent of the country’s economy.
Russia warned that Ukraine’s government has lost control of the country, fueling concern the Kremlin may extend military intervention as U.S. Secretary of State John Kerry called for it to halt a takeover of Crimea.
While Ukraine tops global rankings of corruption, Kim said the bank has mechanisms to track its loans to ensure the money goes “to the people who need it most.”
Asked about the risk of capital flowing out of emerging markets as the Federal Reserve reduces stimulus, Kim said such outflows will probably decline this year, citing signals Fed Chair Janet Yellen will make the exit “as smooth as possible.”
In China, government efforts to shift the engine of expansion from investment and exports to consumption and services “is going to probably lead to some slowing in growth,” Kim said.
The bank will strive to refrain from financing projects that contribute to global warming, he said. Still, “there are countries today, where try as we might, we can’t see options other than fossil fuel, and even coal in very rare circumstances,” he said. “People deserve access to energy.”
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