Public Servants' Salaries Rise as Ukraine Finds Itself Awash in IMF Money

Ukraine's president has lifted restrictions on raising public servants' salaries; whether by chance or not, his decision came right after billions of dollars in financial aid arrived from the IMF.

Ukrainian President Petro Poroshenko has signed a new law which lifts previously-imposed  salary caps on public servants.

This applies to the country’s parliamentary deputies, members of the Cabinet, prosecutors, judges, employees of state bodies, and National bank employees.

The previous regulation restricted the maximum salary for the above categories to seven minimum monthly salaries, which is 8,526 hryvnas ($394), with a minimum salary of just 1,218 hryvnas ($56.27).

The changes are to come into force as of April 1, 2015.

The move coincides with the issuance of the IMF's first $5-billion installment of financial aid to Ukraine.

"The first tranche of five billion has already been issued yesterday [ March 11], in total, up to $10 billion will be allocated by the end of 2015," the head of the IMF mission to Ukraine, Nikolay Gueorguiev, said Thursday.

On Wednesday, IMF chief Christine Lagarde said the money will be used to stabilize the country's economy and support its immediate policy reforms.

Now it becomes clear what reforms Lagarde was talking about.

Interestingly enough, as a contributor to the IMF, Russia took part in providing Ukraine with its first IMF loan tranche, contributing $13.75 million to the tranche on March 13.

And Moscow has frozen the salaries for public servants until January 1, 2016.