Ukraine has had no IMF cash since August 2015, and Ukraine has only actually finished one review thus far under the $17.6 billion program agreed last April – close to one year on.
Roughly $6.6 billion in IMF money was released in the first two tranches last year $5 billion plus $1.6/$1.7 billion), while a further $3.9 billion in disbursements scheduled through to March this year have been stalled, and a further $1.8 billion had been due to be disbursed from April to the end of 2016.
Actually a lot has been achieved over the past year in terms of reform implementation – fiscal adjustment, energy sector reform, PSI, banking sector reform, monetary/exchange rate/NBU reform, et al…but cash is being stalled because of creditor concerns over “rule of law” related issues and concern over political stability and how this will play to continued adherence to IMF conditionality.
It is a bit hard for the IMF to lend big sums of money to a country that has not got a ruling coalition, and where politicians have spent the last two months squabbling over how to reform the government.
Politicians seem to be putting their own political/business interests above those of the country – but I guess, what is new, that kind of happens everywhere these days.
The delays in utility price hikes and then ex-Prime Minister Yulia Tymoshenko’s call for utility price cuts raises serious questions now over the durability of the programme that is, if these latter policies are implemented.
I guess the IMF comments are meant to reassure the markets that the fund is still engaged and that if Ukraine actually gets a new govt in place quickly that IMF funds can quickly begin to be released again. This is kind of a “holding pattern” line from the fund.
That said, the longer this political impasse goes on, the greater risks to macrostability, the sustainability of the IMF programme itself through the foreign exchange reserves and hryvnia channel – remember the IMF programme was always built on very optimistic assumptions for the hryvnia.
