IBRD Loan: US$400 million
Terms: Maturity = 30 years; Grace Period = 5 years
Project ID: P115143
Project Description: The Programmatic Financial Rehabilitation Development Policy Loan (PFRL) in the Ukraine 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. 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. 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.