Ukraine will not get crucial aid from the International Monetary Fund (IMF) before the end of 2020, former Economy Minister Tymofiy Mylovanov, who is currently an adviser to the head of the president’s office, said during an appearance on the Svoboda Slova (“Freedom of Speech”) talk show on the ICTV channel on Nov. 23.
In June, the IMF agreed to lend up to $5.5 billion over the next 18 months to help Ukraine’s economy survive the COVID-19 crisis and immediately sent the first tranche of $2.1 billion to Ukraine. Ukraine was scheduled to receive two more tranches of $700 million each by the end of 2020.
However, to get the money, the country had to fight corruption as well as execute several policies, including supporting households and businesses, ensuring the independence of the National Bank of Ukraine and financial stability and continuing structural reforms to tackle corruption.
One of the reasons the 2020 tranches stalled was a scandalous ruling issued by the Constitutional Court in October. It directly undermined Ukraine’s anti-corruption infrastructure and threatened further cooperation with the IMF. President Volodymyr Zelensky said that the IMF canceled its mission’s visit due to the ruling.
“If there will be no IMF mission. We will have a hole in the state budget,” Zelensky said.
Nearly a month later, the Constitutional Court crisis remains unresolved.
Now Mylovanov, who was recently appointed an unpaid adviser to Andriy Yermak, President Volodymyr Zelensky’s chief of staff, says Ukraine will not get any tranches from the IMF this year.
“It’s impossible,” Mylovanov said on Svoboda Slova, adding that there is no way for Ukraine to meet the fund’s requirements by the end of this year.
However, on Nov. 24 , Ukraine’s Finance Ministry wrote on Facebook that it sees “significant progress in the negotiation process” with the IMF. The ministry promised to reveal more soon.
The Finance Ministry also wrote that it is currently “in the final stages of forming a joint vision with the IMF of the main budgetary parameters within the partnership program.” Apart from that, the ministry plans to submit the draft budget for 2021 soon.
Mylovanov, on the other hand, said the country can succeed in a so-called “staff-level agreement,” which will allow Ukraine to get loans from other organizations. According to Mylovanov, that will help Ukraine attract financing during the negotiations with the IMF at acceptable interest rates.
The IMF approved a new three-year, $5.5 billion loan package for Ukraine in December 2019. It replaced the 14-month, $3.9-billion stand-by arrangement signed in December 2018. That program ended on Feb. 18, 2020, but Ukraine received only the first tranche of the $1.4 billion due to its failure to meet the fund’s requirements for reforms.
The previous, four-year, $17.5-billion program with the IMF also ended prematurely because of Kyiv’s failure to pass crucial reforms. After Ukraine received $8.7 billion, the IMF canceled the program.
