11:27 18.11.2020

Full agreement on actions needed for Ukraine prior to program review with IMF – IMF managing director

3 min read
Full agreement on actions needed for Ukraine prior to program review with IMF – IMF managing director

Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva called the telephone conversation with President of Ukraine Volodymyr Zelensky in the evening of November 17 as constructive, but noted the need to achieve complete mutual understanding in steps for further cooperation on the current Stand-By Arrangement (SBA).

"Constructive call with President Zelensky on IMF program implementation, central bank independence and anti-corruption efforts. Full agreement on actions needed prior to program review," she wrote on Twitter.

In turn, the office of the President of Ukraine, following the results of the conversation, said that the parties "work closely to host the mission" of the Fund as soon as possible, which would conduct the first revision of the program and could recommend the allocation of its second tranche. According to Zelensky, to date, all the obligations provided for the revision of the IMF program have been completed.

As reported, last week, Governor of the National Bank of Ukraine (NBU) Kyrylo Shevchenko said that the visit of the IMF mission to Ukraine could occur by the end of 2020.

For dates to appear, progress must be made on all blocks of issues, he told Voice of America during his visit to Washington. If ways of resolving issues are worked out and both sides begin to move along them, he said that he is an optimist in this matter: Ukraine has every chance to receive an IMF mission by the end of this year.

According to Shevchenko, there are three issues on the agenda of negotiations with the IMF: the decision of the Constitutional Court and anti-corruption activities in Ukraine, the draft state budget for 2021 and the work of the NBU itself. The governor of the central bank said that the decision of the Constitutional Court caused the greatest concern.

On June 9 of this year, the IMF approved a new 18-month Stand-By Arrangegment for Ukraine for SDR 3.6 billion (about $5 billion) with an immediate allocation of $2.1 billion of the first tranche.

Four revisions of the program were planned after the allocation of the first tranche: following the results of June, September and December of this year, as well as June 2021 - with the completion of these revisions respectively on September 1 and December 1 of this year and on May 15 and October 15 – of the next year (2021). The amounts of the second and third tranches are $700 million each, the third - $560 million and the final fourth - $980 million. It was assumed that the virtual mission for the first revision of the program would work on July 13-23, but this plan was violated.

Other international financing sources of Ukraine are also tied to the IMF program. In particular, the successful first revision of the SBA will allow receiving already approved $350 million from the World Bank and EUR 600 million from the EU.

According to informed sources of the Interfax-Ukraine agency, currently SBA is actually put on pause, and the decision of the Constitutional Court on the partial cancellation of the anti-corruption reform, the emergence of the draft state budget-2021 with a deficit of 6% of GDP and tax exemptions merely add questions.

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