Ukraine will need new steps towards fiscal consolidation to achieve progress in talks with IMF
Ukraine will need new steps towards fiscal consolidation, as well as changes in the exchange rate and tariff policies to achieve progress in talks with the International Monetary Fund (IMF), IMF Deputy Executive Director Yuriy Yakusha, representing Ukraine in the fund, said in a letter.
"Without additional steps towards fiscal consolidation, without corresponding changes in the budget, the exchange rate policy and the policy of energy tariffs, it's not worth waiting for decisive progress in talks with the next mission of the IMF," reads the letter dated January 4, the text of which the Ekonomichna Pravda online edition has released.
According to the letter addressed to the heads of the Cabinet of Ministers, the Finance Ministry and the National Bank of Ukraine, the de facto policy of a stable hryvnia exchange rate looks less consistent with the dynamics of the population's income and the growth of the budget under conditions of a fall in the external demand for metals and other Ukrainian exports, and capital outflows from the financial sector.
The letter said it is not worth expecting the IMF to agree to the introduction of taxation of foreign currency purchase, as this could lead to a "black" money market.
"The IMF's previous programs with Ukraine were aimed at achieving greater currency exchange rate flexibility and eliminating the exchange restrictions existing at that time, so it's not worth expecting the fund experts to drastically change their existing position," reads the document.
The document also notes that the protection of the exchange rate stability with administrative methods will not be perceived by the IMF experts as an adequate response to the existing external challenges that require a more integrated approach. In particular, last year the protection of the exchange rate stability with primarily economic methods led to Ukraine's losing currency reserves.