Zelenskiy meets NBU head to discuss IMF cooperation

Ukrainian President Volodymyr Zelenskiy had a meeting
with National Bank of Ukraine Head Yakiv Smoliy on May 24, the latter confirmed
in a tweet the same day. “We discussed the current economic situation and the
work of the banking system, the need to cooperate with the IMF and the
importance of the NBU’s independence,” Smoliy wrote. The meeting was
meaningful, he commented.

Meanwhile, local media were actively discussing
comment by tycoon Ihor Kolomoisky to Financial Times published on May 26, in
which he expressed his personal opinion that Ukraine should default on its
external debt and reject the IMF’s austerity program. “In my opinion, we should
treat our creditors the way Greece does,” Kolomoisky told ft.com, recalling
that Greece was the first developed country to fail to repay an IMF loan
temporarily. He added, “How many times has Argentina defaulted? [ . . .] So
what? They restructured it. It’s fine.” Kolomoisky enjoys close ties to
Zelenskiy, the ft.com report mentioned, pointing out that Kolomoisky’s former
personal lawyer is now serving as Zelenskiy’s chief of staff (presidential
administration head).

Alexander Paraschiy:
Pragmatically, there would be hardly any benefit for Ukraine to default on the
IMF, taking into account that Ukraine is planning to raise from the IMF (and
other IFIs that cooperate with the IMF closely) USD 9.7 bln in 2019-2021,
according to NBU forecasts. This is much more than Ukraine is scheduled to
repay to the IFIs over the same period, or USD 5.0 bln. Therefore, we do not
expect any unfriendly moves from the newly elected president with respect to
IFIs or international creditors.

Therefore, by rejecting Kolomoisky’s “advice,”
Zelenskiy would not only behave responsibly and pragmatically, but also would
be able to “prove” that he is not as dependent on the tycoon as his critics
allege. And the “meaningful” talk between Zelenskiy and Smoliy supports our
optimism.