IMF mission concludes Ukraine visit with no tangible result

An IMF visit led by Ukraine Mission Head Ron van Rooden
concluded its one-week visit to Kyiv on Nov. 22 promising the discussions on a
new program “will continue in the coming weeks,” while mentioning no tangible
results. The IMF team had “constructive and productive discussions” and “made
significant further progress in the discussions” on a new IMF-supported loan
program, according to van Rooden’s comments on Nov. 23. “We are continuing to
work in tight cooperation on a new program,” Prime Minister Oleksiy Honcharuk
commented on Nov. 23. “We are actively moving forward to agreeing on the
program,” Finance Minister Oksana Markarova commented in her blog the same day.

Among the key outstanding issues in the talks is the
concern that the government will be forced to return Privatbank, Ukraine’s biggest
financial institution, to its former shareholders, the epravada.com.ua news
site reported on Nov. 22. Recall, Privatbank was recognized insolvent and
nationalized in December 2016, while Ihor Kolomoisky, one of the bank’s top
former shareholders, is demanding cancellation of the nationalization in local
courts. Following the talks, Ukrainian lawmakers began preparing new legal
initiatives to make the bank’s return to former shareholders impossible,
according to epravda.com.ua.

Alexander Paraschiy: So far, our
expectations remain sustainable that an IMF-sponsored loan program for Ukraine
will be agreed upon by the year’s end. Definitely, the issue of Privatbank’s
future is one of the key items that is being discussed with the IMF, taking
into account the Ukrainian government spent USD 5.9 bln for the bank’s bailout
in 2016-2017, or more than Ukraine is expected to get from the IMF under a new
loan program.

We don’t believe the IMF indeed demanded introducing
new legal obstacles to prevent the return of Privatbank to its former owners,
but it is obvious that the fund wants some guarantees that the bank won’t
return to Kolomoisky. We also do not expect any legal initiative will
completely remove the risk that the bank’s nationalization will be challenged.
Nevertheless, we see a solid chance that Ukrainian government will be able to
agree on the key issues with the IMF in the coming weeks.