The International Monetary Fund is ready to continue supporting Ukraine after the new government affirms its readiness to fulfill the policies agreed with the previous cabinet.
The confirmation of the new government of Volodymyr Groysman on April 14 paved the way for unlocking the third tranche of the $17.5 billion IMF bailout for Ukraine. The disbursement was to arrive in October but was delayed first by disagreement over the fiscal policy changes and the 2016 budget and later by the political uncertainty.
The $1.7 billion tranche will not only replenish the Ukrainian central bank reserves but will also unfreeze additional $4 billion of aid from the U.S., European Union and other donors.
According to Poul Thomsen, director of the IMF European Department, the second review of the Fund’s program for Ukraine was “essentially reached” with the government of ex-prime minister Arseniy Yatsenyuk.
“We have a good basis for quickly concluding the review, but we obviously need to get to the new government’s affirmation of what has been discussed in the past,” Thomsen told the press in Washington on April 15.
New Finance Minister pledges to continue predecessor’s policies
Oleksandr Danylyuk identified the start of cooperation with the IMF as his top priority. Judging from his recent statements, Danylyuk is planning to make no “radical changes” to the restrained finance policy started by his predecessor Natalie Jaresko.
At the same time, he says Ukraine should not count on the IMF for economic development, as the fund has a supportive function.
“We should understand what our state finances will be and what changes we want. If we do this and comply with the IMF requirements, this is great,” Danylyuk said in an interview with Ukrainian newspaper Zerkalo Nedeli published on April 15. “If we ensure growth but at the same time slightly do not fit the IMF framework, then, I think, it is quite realistic to reach a review of the criteria during talks.”
The four-year Extended Fund Facility program worth $17.5 billion foresaw four tranches in 2015 and another four in 2016. Yet, Kyiv received only the first $5 billion tranche on March 13, 2015, and $1.7 billion of the second disbursement on Aug. 4, 2015.
To receive the next tranche, Kyiv must complete the second review of the adjustment and reforms program, which includes talks on a range of issues, including monetary, anti-corruption policy, pension reform, and privatization.
Kyiv Post staff writer Olena Savchuk can be reached at [email protected]
