18:29 20.07.2017

Pension reform, privatization, anti-corruption efforts required for fourth review of EFF

Pension reform, privatization, anti-corruption efforts required for fourth review of EFF

Pension reform, privatization and the fight against corruption are key requirements for the completion of the fourth review of the Extended Fund Facility (EFF) program with the International Monetary Fund (IMF), the Fund's spokesman, William Murray, has said.

"Consideration by the Executive Board of the forth review will be possible once the policies needed for this review are implemented. The focus of this review is on pension reform and on measures to speed up privatization and ensure concrete results in anti-corruption efforts," he said during a regular briefing in Washington on Thursday.

In his words, it is equally important that fiscal and energy sector policies should remain consistent with the program commitments.

As for the land reform, it remains an important condition under the program. However, given a need to develop this reform properly and to reach consensus on key steps ahead, there is need to reset its timing to later this year, Murray said.

As reported, the four-year EFF program launched by the IMF in March 2015, in the total amount of SDR 12.348 billion (around $17.25 billion), initially involved quarterly reviews of the program, with the first tranche of $5 billion, and the next three, SDR 1.18 billion each (around $1.65 billion), to be paid during 2015, and decreasing quarterly tranches to SDR 0.44 billion ($0.61 billion) in 2016-2018.

Ukraine was able to receive, with a slight delay, the second tranche, $1.7 billion, under this program, in early August 2015, followed by a lengthy pause because of the country's failure to meet a number of conditions, political crisis and changes in the government.

Since the arrival of a new government led by Volodymyr Groysman in April 2016 talks over continued funding have resumed but it was not until mid-September that the IMF decided to allocate the third tranche, $1 billion. The fourth tranche was received on April 3, 2017.

According to the new schedule presented in the materials of the IMF, three reviews are planned for late 2017: fourth review in the middle of May, fifth in the middle of August and sixth in the middle of November.

If Ukraine successfully conducts reforms after the fourth review the country could raise $1.907 billion, after the fifth review - $1.28 billion, sixth review - $1.28 billion. In general, some $4.46 billion could be attracted.

In 2018, four more reviews will be conducted and Ukraine could raise around $955 million after each review or some $3.82 billion in general.

Meanwhile, the National Bank of Ukraine said on July 6 it expects two tranches from the International Monetary Fund (IMF) under the EFF program this year instead of the previously planned three. Thus, the central bank downgraded the forecast for funds received from the IMF by the end of the year to $3 billion. At the same time, the bank upgraded the forecast for funds received from the IMF in 2018 to $4.5 billion.

Ukrainian Finance Minister Oleksandr Danyliuk said on July 5 he expects the IMF will decide on the provision of a new tranche to Ukraine under the EFF arrangement this autumn.

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