IMF, Ukrainian authorities agree on an updated cooperation memo
The International Monetary Fund (IMF) has reaches staff-level agreement with Ukraine on third review of the arrangement under the Extended Fund Facility (EFF) program, the Fund said in a press release.
"The IMF staff has reached agreement with the Ukrainian authorities on an updated Memorandum of Economic and Financial Policies. This paves the way for consideration of the third review of the arrangement under the Extended Fund Facility (EFF) by the IMF's Executive Board, together with the 2016 Article IV consultation (collecting economic and financial information), in the second half of March," the press release quoted IMF Mission Chief for Ukraine Ron van Rooden as saying.
The four-year EFF program for Ukraine totaling SDR 12.348 billion (about $17 billion at a current exchange rates), opened by the IMF in March 2015, originally foresaw quarterly revisions of the program, as well as the issue of four tranches to Kyiv in 2015, and reduction of quarterly tranches in 2016-2018.
However, Ukraine was able to get only the first two tranches and then there was a time gap due to the political crisis and the government change.
Negotiations on renewal of funding were resumed after the appearance of a new Cabinet headed by Volodymyr Groysman in April. Initially it was assumed that the third tranche would amount to about $1.7 billion, and the IMF Board of Directors will be able to take their decision in June. But due to non-fulfillment by Ukraine of a number of conditions, the terms have been constantly postponed. This is also the reason why the amount of the loan tranche was reduced to $1 billion. The IMF decided to provide the tranche only in the middle of September.
According to the revised schedule, it was planned to provide next tranches every quarter, in particular, the fourth tranche of $1.3 billion was to arrive in the middle of November 2016.
However, Ukraine lags behind the schedule to meet efficiency benchmarks outlined in the memorandum on the economic and financial policy revised when the country received the third tranche.
The management of the Finance Ministry and the National Bank believe the successful nationalization of PrivatBank and adoption of the state budget for 2017 give reason to expect that Ukraine will receive the fourth tranche from the International Monetary Fund soon.