KIEV (Reuters) - Ukrainian lawmakers voted on Tuesday to lift a ban on the sale of farmland that has stood for nearly two decades, clearing one of the hurdles needed to unlock an $8 billion loan package from the International Monetary Fund.

FILE PHOTO: Ukrainian President Volodymyr Zelenskiy delivers a speech during a parliamentary session in Kiev, Ukraine March 4, 2020. REUTERS/Valentyn Ogirenko

President Volodymyr Zelenskiy had urged lawmakers to support lifting the ban or risk plunging the country, one of Europe’s poorest, into default due to the economic shock from the coronavirus pandemic.

At an emergency session that started on Monday and lasted until past midnight, lawmakers also passed a banking reform bill, another IMF requirement, at the first reading but failed to approve a revised emergency budget for 2020.

Opening up Ukraine’s land market has been a political hot potato for years. Supporters champion the move as a way of unlocking the enormous investment potential in what is already one of the world’s top grain exporters.

The leader of Zelenskiy’s faction in parliament, Davyd Arakhamiia, called it “the end of serfdom in Ukraine”.

But critics complain that it could allow local oligarchs to snap up land or help foreigners muscle out poorer Ukrainians in purchasing plots.

Opposition lawmaker Nestor Shufrich accused lawmakers of “succumbing to blackmail by the International Monetary Fund”.

Attempting to ease voters’ concerns, the new law, which takes effect in July 2021, only allows Ukrainians to buy and sell farmland.

A referendum will be held on whether to let foreigners and entities with foreign owners enter the market as well, though the law gives no date for such a referendum.

The law also sets a minimum starting price for farmland and limits the area that can be accumulated by one person or entity.

DOWNWARD PROJECTIONS

Speaking ahead of the voting, Zelenskiy thanked lawmakers for wearing masks to avoid infection. A lawmaker was one of the first coronavirus cases in the country and several others are suspected of being infected.

“It is difficult for the entire world. And it is very difficult for Ukraine. And support for the Ukrainian economy is very important for us today, support for the people who are working in businesses,” Zelenskiy said.

Ukraine’s economy has been propped up by IMF deals since the 2014 Russian annexation of Crimea plunged the country into turmoil. Such deals, contingent on passing reforms and tackling endemic corruption, also shored up investor confidence.

In revised forecasts submitted to parliament on Monday, the government said it expected the budget deficit to treble and inflation to rise to 8.7% from a previous estimate of 5.8%. The economy could shrink 3.9%, a government spokeswoman said.

To receive IMF loans, parliament will also have to vote again to pass a law which would prevent the former owners of banks declared insolvent from regaining their assets.

The bill is seen by some analysts as working against the interests of Ihor Kolomoisky, a wealthy tycoon and an early backer of Zelenskiy’s 2019 presidential campaign.

Parliament also voted to approve the appointment of Serhiy Marchenko, a former deputy finance minister under a previous administration, as the new finance minister after his predecessor was sacked less than a month into the job.

With the number of coronavirus cases rising fast, parliament also voted to dismiss Health Minister Illia Yemets, who had also been appointed as part of a sweeping government reshuffle at the start of March. He was replaced by a former regional governor.