IMF mission to return to Kyiv once new Cabinet emerges

The IMF Mission to Ukraine led by Ron van Rooden
concluded its visit to Kyiv on May 29, according to the IMF’s May 30 press
release. “The IMF staff team has had very productive discussions with the
Ukrainian authorities, including with President Zelenskiy,” the release stated,
adding that Ukraine’s “fiscal and monetary policies remain on track.”
However, the mission won’t make any review of its existing SBA program with
Ukraine following this visit. Instead, the IMF said it “stands ready to return
to Kyiv to continue discussions after the forthcoming parliamentary elections
as soon as a new government has clarified its policy intentions.”

Recall, according to the agreed parameters of the SBA
program launched in December 2018, Ukraine received a USD 1.4 bln loan tranche
in 2018 and was scheduled to receive two more tranches totaling USD 2.5 bln in
May and November 2019. Early parliamentary elections in Ukraine have been
scheduled for July 21, which should enable a new parliament to form a new
Cabinet not earlier than in September.

Alexander Paraschiy: There are
no surprises in this IMF statement, whose key messages were published by Ukrainian president’s website on May 28,
following Zelenskiy’s meeting with the IMF mission. We are sticking to our
position that Ukraine will likely gain its next IMF tranche not earlier than
late November. At the same time, we are likely to see positive news from the
IMF on possible cooperation much earlier, or as soon as a new Cabinet is formed
in Ukraine. Potentially, such messages of support will allow Ukraine to tap the
Eurobond market in the middle of autumn, enabling MinFin to secure adequate
financing of its 2019 budget deficit.