The IMF mission left Kyiv last week empty handed. Most had expected it to finalize a $6 billion program. This week Oleksandr Danylyuk, the reformed-minded head of the National Security and Defense Council, resigned. The two events are tied together by oligarch Ihor Kolomoisky. Danylyuk pointed to an increased risk that the nationalization of Ukraine’s largest bank PrivatBank will be reversed. In December 2016, the state took Kolomoisky’s bank, after a $5.5 billion hole was revealed. Kolomoisky’s increased influence is also a concern for the IMF. In a tweet, Ukraine’s central bank governor Yakiv Smolii said IMF talks will resume this month in Washington and will center around “ending the pressure on reformers and preserving financial stability.” (The governor is referring to recent attacks on previous governor Valeria Gontareva who nationalized Kolomoisky’s bank.) Smolii also mentioned “court cases in Ukraine and beyond” in an apparent reference to PrivatBank cases, where important developments are expected this month. The no-news IMF visit and Danylyuk’s resignation shocked Ukraine’s eurobond market, putting pressure on the local currency exchange rate and gave a lot of investors indigestion.
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A woman withdraws money at a PrivatBank branch in Kyiv on April 4, 2019. PrivatBank is the largest state-owned bank in Ukraine, acquired after its former co-owner, oligarch Ihor Kolomoisky, left the bank needing a $5.6 billion taxpayer bailout.
