After reading a Bloomberg story that Ukrainian Prime Minister Volodymyr Groysman on June 23 urged Ukraine to continue cooperating with the International Monetary Fund, my reaction is that this kind of commentary from Groysman and President Petro Poroshenko is becoming a bit tiresome now.
Bloomberg went on to quote Groysman as saying that the Ukrainian government is working on finding a “fair formula” for the gas price for households and that IMF loans are needed because the nation has to repay $33 billion in debt within the next five years. “It means we have to go beyond the Ukrainian financial system to borrow resources, refinance and reduce debt servicing costs,” Groysman said.
Everyone knows what they need to do – pass an IMF/Venice Commission compliant High Anti-Corruption Court, gas price hikes, and budget revision. As of this writing, and as the IMF made clear, the amendments tabled to the anti-corruption court bill passed at second reading a few weeks back open the way for many of those currently under National Anti-Corruption Bureau of Ukraine investigation and prosecutions to avoid High Anti-Corruption Court oversight.
This just smells like a “get out of jail for free card.”
The Verkhovna Rada did pass the enabling legislation for the full bill, as required by the IMF, but seems reluctant to change the amendment and it seems unlikely that this is going to be done now before the Rada goes into summer recess in mid-July.
I guess we all assumed that Ukraine’s political elites might take the release of IMF financing, and connected international financial institution financing – around $4 billion in total – seriously, and especially given that the Ukraine Reform Conference is looming in Copenhagen on June 27.
I guess if they have failed to focus on getting the IMF program back on track before the Copenhagen gig, then we cannot assume they will be under much impetus to get the required amendments changed before the summer recess. You might remember that the IMF program was also stalled this time last year, and before the London donor conference.
This all makes for a pretty embarrassing session in Copenhagen – waste of money now in my mind, and I don’t see the point of lots of air flights and hotel bills being paid when the proof of the pudding is revealed by the fact the IMF program has been stalled now for 14 months.
The comments from the National Bank of Ukraine, suggesting that Ukraine can survive without IMF disbursements through to 2021, were pretty worrying. It implies a very naïve and pretty unrealistic view. Does the ruling team assume that the IMF and donors will just cave in, and sign some big checks, even though IMF compliance has not been delivered now on several important fields – High Anti-Corruption Court, oil prices and budget adjustment for 2018?
It certainly feels like Ukraine is already in election mode. You have to ask yourself, if Poroshenko is now willing to do what it takes to get IMF lending back on stream now, mid-summer, what might change in the autumn, just six months before elections, and with the heating season just over the horizon?
Actually, I always had a kind of base case scenario where Poroshenko pushed for passage of a version of the anti-corruption court which fell short of the Venice Commission/IMF requirement, but was in some grey zone, and would hope to sell this as some great success, and then market this as such. But the crux for the IMF is having an independent, credible and effective anti-corruption court, which still does not seem to be the case. I assume the High Anti-Corruption Court will be marketed in Copenhagen as some great reform achievement, even though it does still fall short of IMF requirements. A great opportunity to sell a great landmark reform achievement for Ukraine has been seemingly lost again.
